Question

On January 1 , a corporation issues bonds that have a $5,000,000 par value, mature in 20 years, and pay 8% interest semiannually on June 30 and December 31 . The bonds are sold at pat. Complete this question by entering your answers in the tabs below. Prepare the joumal entry to record the issuance of the bonds on January 1. Journal entry worksheet

Answer 1

The journal entry for a corporation issuing $5,000,000 of bonds at par will include debiting Cash and crediting Bonds Payable for $5,000,000, on January 1 to reflect the inflow of cash and the company's liability.

Step-by-step explanation:

The question involves a corporation issuing bonds with a par value of $5,000,000, an interest rate of 8% paid semiannually, and the bonds maturing in 20 years. Since the bonds are sold at par, the journal entry to record the issuance of these bonds on January 1 would be to debit Cash and credit Bonds Payable for the amount of $5,000,000. This reflects the inflow of cash from the bond investors and the firm's obligation to pay back the bond's par value at maturity.