Respuesta :
Answer:
1. Cash A/c Dr $63,948
Discount on bonds payable A/c $6,052
To Bonds payable A/c $70,000
(Being the issuance of the bond is recorded)
2. Interest expense A/c Dr $2,558
To Discount on bonds payable A/c $108
To Cash A/c $2,450
(Being the first interest payment is recorded)
Explanation:
The journal entries are shown below:
1. Cash A/c Dr $63,948
Discount on bonds payable A/c $6,052
To Bonds payable A/c $70,000
(Being the issuance of the bond is recorded)
2. Interest expense A/c Dr $2,558
To Discount on bonds payable A/c $108
To Cash A/c $2,450
(Being the first interest payment is recorded)
The computation is shown below:
For interest expense
= $63,948 × 8% × 6 months ÷ 12 month
= $2,558
For cash A/c
= $70,000 × 7% × 6 months ÷ 12 month
= $2,450
The journal entry will be
Debit Cash A/c $63,948
Debit Discount on bonds payable $6,052
Credit Bonds payable $70,000
(Being the issuance of the bond is recorded)
Debit Interest expense $2,558
Debit Discount on bonds payable $108
Credit Cash A/c $2,450
(Being the first interest payment is recorded
Based on the information given, it should be noted that the interest expense is calculated as:
= ($63,948 × 8% × 6 months) / 12
= $2,558
For the cash account, it's calculated as:
= ($70,000 × 7% × 6 months) / 12
= $2,450
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