Crocus Company Ltd. issued 15-year, 12% first mortgage bonds with a par value of $600,000 on January 1, 2006. The bonds pay interest semi-annually and were issued at 134.58 to yield 8%. The company’s year end is December 31.
what to calculate?
What amount of cash does Crocus Company Ltd. pay its bondholders every six months? Prepare the journal entries at June 30, 2006, and December 31, 2006, to record the interest expense and interest payments.
Interest accrual with bond premium?
b4 explaining what amount of cash does Crocus Company Ltd. pay its bondholders every six months? u have to calculate the amount Crocus Company Ltd. received on January 1, 2006, and prepare the journal entry for the bond issuance?
so the ammount recieved y crocus company s = $600,000 x 1.3458 = $807,480 and now Cash paid to bondholders each 6 months = $600,000 x 12% x 6/12 = $36,000.
Journal entries at june 30,2006 and dec 31 2006 wld b
June 30, 2006
Interest expense (SE) 32,299
Premium on bonds payable (L) 3,701
Cash (A) 36,000
$807,480 x .08 x 6/12 = $32,299
Dec. 31, 2006
Interest expense (SE) 32,151
Premium on bonds payable (L) 3,849
Cash (A) 36,000
($807,480 - $3,701) x .08 x 6/12 = $32,151
Chemicals
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