Concept: Issuing Zero Coupon Bonds6m
Concept: Zero Coupon Bonds: Repaying Principal at Maturity2m
Problem: On January 1, ABC Company issues $1,000,000 of zero coupon bonds at 75. The bonds mature in five years. Assuming that ABC uses the straight-line method for amortization of bond premiums and discounts, the journal entry at the end of the first year would include:4m
Accounting for a zero coupon bond is similar to
A) accounting for a bond sold at a discount.
B) accounting for a bond sold at a premium.
C) accounting for a bond sold at par value.
D) accounting for common stock sold at a price less than par value.