What journal entry would be made for the payment of interest

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In May 2017, Apple (NASDAQ: AAPL) filed a prospectus with the SEC, indicating that it would be issuing another $7 billion in bonds during 2017. (Apple issued $10 billion in bonds in February 2017 in the US and $1 billion in Taiwan.)

  • With the bond proceeds, Apple will be buying back its own stock. Apple has also indicated that there will be a 10.5 percent dividend increase for its shareholders.

Problem 1: What journal entry would Apple make when it issues $7 billion in bonds?

Problem 2: How are assets, liabilities, and equity impacted by the bond issuance?

Problem 3: Name the account(s) impacted and whether an increase of decrease.

Problem 4: On what financial statement is the balance of bonds payable shown? Where is it shown on that financial statement?

Problem 5: What journal entry would be made for the payment of interest (ignore the dollar amount - just account title(s) and debit/credit).

Problem 6: How does Apple's issuance of bonds and buyback of its own stock impact its accounting equation?

Reference no: EM132839943

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