The City of Tutland issued $10 million, 6 percent, 10-year bonds at 101 to finance refurbishment of its water utility fund equipment. The bond issuance is recorded in the water utility enterprise fund as

Question

Business

Giovanni Wilkerson

2 July, 05:28

The City of Tutland issued $10 million, 6 percent, 10-year bonds at 101 to finance refurbishment of its water utility fund equipment. The bond issuance is recorded in the water utility enterprise fund as

+4

Answers (1)

Know the Answer?

Frau Frau · Answer 1

The bond issuance is recorded as bonds payable of $10 million and premium on bonds payable of $100,000.

Explanation:

Since the bond is payable at 101, with a 6% rate for 10 years, after calculation you will find out that the bond payable is $100000 (10 year-bond payable at 101). The bond payment will be premium, meaning the payment of complete $10million over the course of 10years (apart from the $100000 payable bond)