(Answered) Accounting for bonds payableon january 1 2015 crabbamp co

Accounting

Accounting for Bonds Payable

On January 1, 2015, Crabb& Co. issued 10-year bonds with a total face value of $500,000. The bond requires annual interest payments on December 31 at a stated rate of 6%. Bonds with similar features are discounted in the market at 8%.

Were the bonds issued at a discount or a premium?

How much cash will Crabb& Co. receive from issuing the bond?

How does this transaction affect Crabb& Co.'s balance sheet on the date of the issuance?

What is the amount of cash interest paid by Crabb& Co. in 2015?

What is the amount of interest expense on the income statement in 2015?

What is the carrying value of the bond on December 31, 2015?

Prepare the entry at 12/31/15 to record interest expense, cash paid, and discount amortization.

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