On the First Day of the Fiscal Year, a Company

question 52

Essay

On the first day of the fiscal year, a company issues a $1,000,000, 7%, 5 year bond that pays semi-annual interest of $35,000 ($1,000,000 x 7% x 1/2), receiving cash of $884,171. Journalize the first interest payment and the amortization of the related bond discount using the straight-line method. Round answer to the nearest dollar.

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Definitions:

Interstate Commerce

Refers to any trade, traffic, or transportation within the U.S. that crosses state boundaries or affects more than one state.

Arbitration Clause

A clause in a contract providing that, in case of a dispute, the parties will determine their rights through arbitration rather than through the judicial system.

Dispute

A disagreement or conflict between parties that can be resolved through negotiation, mediation, or legal action.

Negotiation

A dialogue between two or more parties intended to reach a beneficial outcome over a conflict, disagreement, or to forge agreements while addressing each party's interests.