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A discount on bonds payable is recorded when

a discount on bonds payable is recorded when

This is caused by the bonds having site uri cu vouchere a stated interest rate which is lower than the market interest rate for similar bonds.
What are Bonds in Accounting?
This happens when investors are willing to accept a lower return on their investment, because the stated interest rate is higher than the market interest rate.
However, the bonds are actually issued when the market demanded.1.The entry for interest payments is a debit to interest expense and a credit to cash.If the market rate was also 10, then the investors, using the formula above, would be prepared to pay the present value of the cash flows: i 10/2 every 6 months n 2 x 5 10 6 month periods.The stated or contract interest rate n number of coupon payments per year.The bonds payable would be issued at a premium value of 108,111, and the journal entry to record this would be as follows.Solution Since there promotion codes for next free delivery is no indication that the bonds were issued at either premium or discount, so the journal entry to record the bonds shall be: Cash/Bank 10 M Bonds payable 10 M The periodic interest payments equal the face value multiplied by the coupon.Bonds Payable Payment at the end of the term Account Debit Credit Bonds payable 100,000 Cash 100,000 Total 100,000 100,000 Premium on Bonds Payable Market interest rate Bond rate If the market rate was lower than the bond rate, say 8, then the investors again.Interest paid, effective interest rate for semiannual period.The entry would be: Debit, credit, cash xxx, discount on bonds payable xxx, bonds payable xxx, if investors buy the bonds at a premium, the difference between the face value of the bonds and the amount of cash received is recorded in a premium.What are Bonds Payable?Bonds payable are long term liabilities and represent amounts owed by a business to a third party.As explained in Exercise 2, the price of bonds is 540,573, and bonds will be sold at 40,573 premium over the face amount of 500,000.Convertible bonds payable Allow the owner to exchange them in return for shares in a business.