On January 1, 2016, Crammer Inc. issues five-year bonds with a total face amount of...
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Accounting
On January 1, 2016, Crammer Inc. issues five-year bonds with a total face amount of $1,000,000 and a stated rate of 10%. The bonds were issued at 96 on January 1, 2016. Interest is paid semiannually on June 30 and December 31.
1. What is the balance in the Premium or Discount account after the June 30, 2016 entry? Show your calculation.
2. What is the carrying value of the bonds after the June 30, 2016 entry? Show your calculation.
3. Give the journal entry to record the repayment of the bond at maturity on January 1, 2021, after all interest has been paid.
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