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What is Accounting for Discounted Bonds about?

This document discusses how to account for discounted bonds. It provides an example where a company issues a $100,000 bond that pays 7% annual interest over 4 years, but the market rate is 11%. To record this, the company debits cash for $87,590, debits discount on bonds payable for $12,410, and credits bonds payable for $100,000. Each year, it records interest expense of $9,635 by debiting interest expense and crediting discount on bonds payable for $2,635 and cash for $7,000 in interest, amortizing the di

Author

HassleBust

Language

EN