Help someone in accounting! A company issued 5 yr 7% bonds par value 100,000. It received 98,000 bond use sl4a

A company issued 5-year, 7% bonds with a par value of 100,000. On January 1, 2007 the company received $98,000 for the bonds. Using the straight-line method for amortization, the amount of interest expense for the first annual interest period is?

Show me how you got your answer

When the co. issued the bond, the entry was:
Dr Cash 98,000
Dr Bond discount 2,000
Cr Bond payable 100,000

Interest can be payable semi-annually or annually. In your case it's annually. Since it's annually, and the method is straight-line, you amortise the bond discount over 5 annual periods, i.e. each period you amortise 2,000/5 = 400. When it's time to pay the interest, the entry is:
Dr Bond interest 7,400
Cr Bond discount 400
Cr Cash 7,000 ($100,000 x 7%)

Tags

　　Accounting Education 　　Accounting Services 　　Accounting Career 　　Accounting Jobs 　　Small Business Accounting 　　Accounting Company 　　Accounting Firm 　　Tax Accounting 　　Cost Accounting 　　Accounting Bookkeeping 　　Managerial Accounting

Related information

Accounting Help!: If a company negotiates a contract worth $20,000 what accounting elements does it affect?

Sounds like a homework problem from your accounting class. Read the book and figure it out.

...

I need Worksheet (accounting)of any company?

You can go to any company's website, go to financial and grab the information there. For example.. ...

How do you pronounce "Deloitte and Touche"? (the accounting company)?

Deh-loyt & Toosh

...

Who is a good Accounting company within the Los Angeles area?

Pick any of the big 4 firms PWC EY KPMG Deloitte Grant Thornton's a smaller firm but growing quite rapidly.

...

What are the role of the stock exchange in company accounting ?

Each exchange has rules about the accounting standards that its listed companies must meet. For instance, companies must provide timely filings. If a company is unable to provide a timely filing, i...

How should the performance of the Public Company Accounting Oversight Board be evaluated?

Start with ethics. Maybe they are not trustworthy and should be ousted. Martha Stewart paid her dues, maybe they should too if there is any wrong doings.

...

The answer of the book "Leo Hoggett: Company Accounting in Australia 6th edition"?

It's really hard for a student to get hold of an answer book to a textbook, especially if its the prescribed text for the course. Perhaps your tutor might lend you theirs over the weekend, un...

Explain each step of the accounting cycle of a company. Describe at least one transaction that would occur.?

1) Transactions are analized and recorded in the journal. This is wher you keep track of the daily operation of the business. Example: dr cash 5,000. cr fees earned 5,000. dr supplies 1,00...