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Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on January 1, 2017. Garcia Company issues 9.00%, 15-year bonds with a par value of $400,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 7.00%, which implies a selling price of 115 3/4.

Respuesta :

Answer:

Journal Entries for jan 1, 2017

Explanation:

Face value of bond = 400,000

Proceeds = 400,000 X 1.1575 = 463,000

Premium = 463,000 - 400,000 = 63,000

Jan 1, 2017

                                                   Debit        Credit

Cash                                         463,000

Premium                                                       63,000

Bond payable                                              400,000

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