Question

Brief Exercise 15-03 a-c

Sunland Corporation issued 3,800, 9%, 5-year, $1,000 bonds dated January 1, 2020, at 100. Interest is paid each January 1.

Prepare the journal entry to record the sale of these bonds on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Janaury 1, 2020

Prepare the adjusting journal entry on December 31, 2020, to record interest expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
December 31, 2020

Prepare the journal entry on January 1, 2021, to record interest paid. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
January 1, 2021

Answer 1

Solution :

Journal Entries - Sunland Corporation
Date	Particulars	Debit	Credit
1-Jan-20	Cash Dr	$3,800,000.00
	To Bond Payable		$3,800,000.00
	(To record issue of bond)
31-Dec-20	Interest expense Dr ($3,800,000*9%)	$342,000.00
	To Interest payable		$342,000.00
	(To record interest expense accrued)
1-Jan-21	Interest payable Dr	$342,000.00
	To Cash		$342,000.00
	(To record interest payment)