A Company Issued 9%, 10-Year Bonds with a Par Value

question 38

Essay

A company issued 9%, 10-year bonds with a par value of $1,000,000 on September 1, Year 1 when the market rate was 9%. The bonds were dated June 30, Year 1. 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 on September 1.
(b) Prepare the issuer's journal entry to record the semiannual interest payment on December 31, Year 1.

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Definitions:

Capacitive Reactance

The opposition to the change in voltage across a capacitor, measured in ohms and varying with frequency.

Parallel Connection

An arrangement in electrical circuits where components are connected across common junction points, allowing each component to operate independently of the others.

Frequency Source

An electronic device or system that generates a repetitive signal of a fixed, specified frequency.

Anti-Federalist

Individuals opposed to the ratification of the U.S. Constitution in the late 18th century, fearing it concentrated too much power at the federal level and lacked sufficient protection for individual rights.