Mellilo Corporation issued $4.7 million of 20-year, 9.5 percent bonds on July 1, 2021, at 98. Interest is due on June 30 and December 31 of each year, and all of the bonds in the issue mature on June 30, 2041. Mellilo's fiscal year ends on December 31. Prepare the following journal entries.

On Issue date

July 1, 2021

Debit : Cash $4.606 million

Credit : Bonds Payable $4.606 million

Explanation:

The journal entry on Issue date  include a debit of Cash and Credit to Bond Payable at discount price of 98 % ($4.606 million).

The reduction in long-run average and marginal costs arising from an increase in size of an operating unit (a factory or plant, for example). Economics of scale can be internal to an organization (cost reduction due to technological and management factors) or external (cost reduction due to the effect of technology in an industry).