Question

Gloria's Glorious Morning Muffins issued a $10,000 bond exactly a year ago. The bond is a three-year bond that pays interest every six months. The issue price of the bond was $10,983.46. Today's cash interest payment (the second one Gloria has made) was $800, and interest expense recorded was $650.55.

a. Show the journal entry Gloria will make to record the mentioned interest payment. Some of the information has been filled in to help you. Round your answers to the nearest two decimal places.
Dr. Interest Expense for $_____
Dr. _______ for $ ______
Cr. ______ for $ _____
b. What is the market rate of interest per period on Gloria's bond? Write your final answer as a percentage (Ex: If you find the market rate of interest is 10%, put 10, not 0.10).

Answer 1

Gloria will record the interest payment by debiting the Interest Expense and Bond Interest Payable accounts, and crediting the Cash account.

Step-by-step explanation:

The journal entry Gloria will make to record the mentioned interest payment is as follows:

Dr. Interest Expense for $650.55

Dr. Bond Interest Payable for $149.45

Cr. Cash for $800

Answer 2

Dr. Interest Expense for $650.55

Dr. Bond Payable for $ 149.45

Cr. Cash for $ 800