On December 31, 2009, Idaho Mining, Inc., issued $50 million of 10-year, 6% debentures at par. 1.

Question:

On December 31, 2009, Idaho Mining, Inc., issued $50 million of 10-year, 6% debentures at par.

1. Compute the proceeds from issuing the debentures.

2. By using the balance sheet equation format, prepare an analysis of this bond transaction.

Show entries for the issuer concerning

(a) Issuance,

(b) First semiannual interest payment, and

3. Show the corresponding journal entries for (a), (b), and (c) in requirement 2.

4. Show how the bond-related accounts would appear on the balance sheet as of December 31, 2009, and June 30, 2010. Assume that the semiannual interest payment due on June 30, 2010, the balance sheet date, has been made.

Debentures
Debenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...