Reference no: EM132774684
On January 1, 2020, PT Harapan Abadi issued a $ 12,000,000, 8%, 10 year bond with an effective interest rate of 10%. Bond interest is paid semiannually, July 1 and December 31. Financial statements are prepared annually on December 31. PT Harapan Abadi received cash from the issuance of the bonds amounting to $ 10,504,541
Instructions:
Problem (a) Keep a journal to record the issuance of bonds.
Problem (b) Keep a journal to record interest payments on July 1 and December 31, 2020, (the amortization method used is the effective interest method)
Problem (c) Explain why the company only received $ 10,504,541 cash upon issuance of the bonds while the face value of the bonds was $ 12,000,000.
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