Bonds Payable-Issued Between Interest Dates

question 185

Essay

Bonds payable-issued between interest dates
Barney Corporation received authorization on 31 December, Year 1, to issue $2,500,000 of 6%, 10-year bonds. The interest payment dates are 30 June and 31 December. All the bonds were issued at a price of 100, plus accrued interest, on 28 February, Year 2, two months after the authorization of the bond issue.
(d) The amount of cash received by Barney Corporation from issuance of the bonds on 28 February, Year 2, is: $________________
(e) The amount of cash paid to bondholders on 30 June, Year 2, is: $________________
(f) Bond interest expense reported in Barney's year 2 income statement is: $________________
(d) Prepare the journal entry at 28 February, Year 2, to record the issuance of the bonds.
(e) Prepare the journal entry at 30 June, Year 2 to record the first semiannual interest payment on the bonds.

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Definitions:

Theory of Atoms

A scientific theory that matter is composed of discrete units called atoms, which are the basic building blocks of chemical substances.

Law of Definite Proportions

A chemical law stating that a compound always contains exactly the same proportion of elements by mass.

Dalton's Atomic Theory

A foundational concept in chemistry that asserts elements are composed of tiny, indivisible particles called atoms, and that chemical reactions involve the rearrangement of these atoms.

Rutherford

Refers to Ernest Rutherford, the scientist who proposed the model of the atom with a central nucleus surrounded by electrons.