Chapter 8
Non-Current Liabilities
393
AP-6A (
2
4
)
On January 1, 2016, Metro Inc. issued a five-year bond with a par value of $700,000. The bond
bears an interest rate of 6% per annum, with the interest paid semi-annually. On January 1,
2016, the market interest rate was 8%.
Required
a) Calculate the amount of a bond discount or a bond premium.
b) Prepare the journal entry to record the sale of the bonds.
Date
Account Title and Explanation
Debit
Credit
