Question

On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:
Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.

Answer 1

July 1, 20Y1

Debit : Cash $42,309,236

Credit : Bonds Payable $42,309,236

Step-by-step explanation:

Debit the Cash Account and Credit the Bonds Payable Account with the amount of Cash received as a result of the issue. In this case the issue price is $42,309,236.