Prepare the journal entries to record the issuance of bonds

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Reference no: EM132784190

Question - Novy Corporation is planning to issue bonds with a face value of $630,000 and a coupon rate of 7.5 percent. The bonds mature in 4 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Novy uses the effective-interest amortization method and also uses a discount account. Assume an annual market rate of interest of 8.5 percent.

Required -

1. Prepare the journal entries to record the issuance of the bonds and interest payment on June 30 of this year.

2. What bonds payable amount will Novy report on its June 30 balance sheet?

Reference no: EM132784190

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