On July 1, Ball Computer Corporation issued 10-year, 8%, $200,000 bonds for 96. Interest is due June 30 and December 31. Prepare the journal entries to record:
a. Issuance of the bond.
b. First semiannual interest period payment including the amortization of the discount using the straight-line method.
What will be an ideal response?
Answer:
a.
Cash 192,000
Discount on Bonds Payable 8,000
Bonds Payable 200,000
b.
Bond Interest Expense 8,400
Discount on Bonds Payable 400
Cash 8,000
Business
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According to Modigliani and Miller' Proposition II without taxes:
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