Solution-Journal entry to record bond interest receipt

Journal entry to record bond interest receipt

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Reference no: EM133306436

On June 1, 2010, Groogan sold a six-year $ 200,000 par bond issue to Golden Indian Company for $167,176. The bonds pay interest at 8 percent each May 30 and were bought to yield 12 percent. Golden Indian's fiscal year ends on December 31, and Golden Indian uses the effective interest method for interest revenue and discount amortization. At December 31, 2010, the market price for the bonds was 90.

The May 30, 2011 journal entry to record bond interest receipt and amortization of any discount or premium includes a:

Credit to Interest Receivable of $8,000 and credit to Interest Revenue of $10,031

Credit to Interest Receivable of $9,333 and debit to Held-To-Maturity Bonds of $2,031

Debit to Held-To-Maturity Bonds of $2,031 and a credit to Interest Revenue of $10,031

Debit to Cash of $16,000 and debit to Held-To-Maturity Bonds of $1,692

Reference no: EM133306436

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Journal entry to record bond interest receipt

Reference no: EM133306436

Reference no: EM133306436

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