What is the deferred revenue?
Deferred revenue is not yet revenue. It is an amount that was received by a company in advance of earning it. The amount unearned (and therefore deferred) as of the date of the financial statements should be reported as a liability. The title of the liability account might be Unearned Revenues or Deferred Revenues.
When the deferred revenue becomes earned, an adjusting entry is prepared that will debit the Unearned Revenues or Deferred Revenues account and will credit Sales Revenues or Service Revenues.
Learn more about Adjusting Entries. AccountingCoach.com also has three FREE interactive Crossword Puzzles on adjusting entries.
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On January 2, 2008, a company issued $5000,000, 10-year bonds for $574,540. The bonds pay interest on June 30 and December 31. The face rate is 8% and the market rate is 6%.
1) What is the interest expense on the bonds at June 30, 2008?
2)The annual cash payment paid semiannually on the bond is?
3) what is the carrying value on the bonds after the first interest payment is made on June 30,2008?
4) What is the carrying value of the bonds at the end of 10 years?
5) at the maturity date, besides an interest payment, the company would repay the bondholders what amount?
Ans:
1) @8%
2) semiannually payable will be 200,00
3)
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