6390000 of Sandhill Inc.'s 12% bonds, with interest due on July 31 and January 31 every year, were still outstanding. On July 1, it issued 8240000 10% 15-year notes with a 97 interest rate (interest is due on July 1 and January 1). On August 1, a portion of the proceeds were used to call the 12% bonds (with an unamortized discount of 63900). composing journal entries.
3,000,000 in Cash and 3,000,000 in Bonds
An investor makes a loan to a borrower by issuing a fixed-income security known as a bond (typically corporate or governmental). The terms of the loan and the payments are outlined in a bond, which can be compared to an I.O.U. between the lender and borrower. Companies, towns, states, and other sovereign entities all use bonds to finance their operations and capital expenditures. Debtholders or creditors of the issuer are the people who own bonds. The final date on which the loan's principle is scheduled to be repaid to the bond owner is included in the specifics of the bond, as are typically the conditions for the borrower's variable or fixed interest payments.
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