On January 1 of the Current Year,a Company Paid $150,000

question 205

Essay

On January 1 of the current year,a company paid $150,000 cash to purchase 7%,10-year bonds,with a par value of $150,000; interest is paid semiannually on June 30 and December 31.The company intends to hold these bonds until they mature.Prepare the journal entries to record the bond purchase and receipt of the semiannual interest payments on June 30 and December 31 of the current year.

---

Definitions:

Finished Goods

Products that have completed the manufacturing process and are ready to be sold to consumers.

Work in Process Inventory

Goods that are in the process of being manufactured but are not yet completed.

Direct Materials

Raw materials that are directly traceable and attributable to the manufacturing process of a product.

Overhead Application Rate

The overhead application rate is a calculated rate used to apply or allocate overhead costs to individual units of production, based on a specific formula, such as machine hours or labor hours.