Question

Claire Corporation is planning to issue bonds with a face value of $100,000 and a coupon rate of 8 percent. The bonds mature in two years and pay interest quarterly every March 31, June 30, September 30, and December 31. All of the bonds were sold on January 1 of this year. Claire uses the effective-interest amortization method and does not use a discount account. Assume an annual market rate of interest of 12 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
1. Provide the journal entry to record the issuance of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar amount.)
2. Provide the journal entry to record the interest payment on March 31, June 30, September 30, and December 31 of this year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar amount.)
3. What bond payable amount will Claire report on this year's December 31 balance sheet? (Round your final answers to nearest whole dollar amount.)

Answer 1

to record the payment of bond interest. On the bonds worth $100,000 that were outstanding for a month, this entry records a $1,000 interest expense.

What is the journal entry to reflect the bond issuance?

The following is the entry to reflect the bond's issuance: Charge $98.5 million to Cash. Bond Discount is debited by $500,000 Costs of issuing a $1 million debt bond.

How is the issue of bonds recorded?

When a business issues bonds to raise money, bonds payable are recorded. The business is a borrower as it is a bond issuer. As a result, the bond's issuance creates a liability. Bonds payable are consequently listed as a liability on the company's balance sheet.

To know more about interest visit:

https://brainly.com/question/29480777

#SPJ4