A Company Issued 9%,10-Year Bonds with a Par Value of $1,000,000

question 53

Essay

A company issued 9%,10-year bonds with a par value of $1,000,000 on September 1,2013,when the market rate was 9%.The bonds were dated June 30,2013.The bond issue price included accrued interest.Interest is paid semiannually on December 31 and June 30.
(a) Prepare the issuer's journal entry to record the issuance of the bonds.
(b) Prepare the issuer's journal entry to record the semiannual interest payment on December 31,2013.

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Definitions:

Total Cost

The aggregate cost of all inputs used in the production of goods or services, including fixed and variable costs.

Purely Competitive Seller

A seller in a market where there are many sellers and buyers, the product is standardized, and no single seller can influence the market price.

Shut Down

A temporary closure of a business or operation.

Marginal Cost

The expenditure required to produce one more unit of a product or service.