On January 1, 20X0, Washington Park District issued $20 million of 5-year, 6% debentures. Interest is paid
Question:
On January 1, 20X0, Washington Park District issued $20 million of 5-year, 6% debentures. Interest is paid semiannually. The market interest rate at issuance was 10%. 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,
(c) Payment of maturity value.
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 sheets as of January 1, 20X0, and July 1, 20X0. Assume Washington Park District has already recorded the semi-annual interest payment and amortization due on the balance sheet dates.
Balance SheetBalance 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...
Step by Step Answer:
Introduction to Financial Accounting
ISBN: 978-0133251036
11th edition
Authors: Charles Horngren, Gary Sundem, John Elliott, Donna Philbrick