On December 31, the date of issuance, the entry is: The entries for the 10 years are as follows: Valley made the required interest and principal payments when due. ![]() The bonds are dated December 31, call for semiannual interest payments on June 30 and December 31, and mature in 10 years on December 31. The following examples illustrate the accounting for bonds issued at face value on an interest date and issued at face value between interest dates.īonds issued at face value on an interest date Valley Company’s accounting year ends on December 31. ![]() ![]() If interest dates fall on other than balance sheet dates, the company must accrue interest in the proper periods. When a company issues bonds, it incurs a long-term liability on which periodic interest payments must be made, usually twice a year.
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