Question

inment CALCULATOR FULL SCREEN PRINTER VERSION Question 11 On January 1, 2019 Focus Corporation issued $500,000, 6%, 5-year bonds at face value. Interest is payable annually on January 1. Prepare journal entries to record the (Credit account titles are automatically indented when the amount is entered. Do not Indent manually.) (a) (b) (c) Issuance of the bonds. Accrual of interest on December 31. Payment of interest on January 1, 2020. Account Titles and Explanation Debit Credit @ @ Click if you would like to Show Work for this question: Open Show Work SAMSUNG

Answer 1

Bonds are issued at face value so it will be debited to cash account and credited to Bonds payable account.

The interest is payable on January 1. The accrued interest is to be recorded on December 31. Interest expense is to be debited and Accrued expenses is to be credited.

Journal entries are as below:

Date Credit 500000 Journal entries in the books of Focus Corporation Particulars Debit 01/01/2019 Cash A/C --------- Dr 500000 To, 6% Bonds payable A/c |(Being 6% Bonds are issued at par) 31/12/2019 Interest expenses A/C ------- Dr 30000 To, Interest payable A/c |(Being interest on bond accrued but not paid) (500,000*6%) 01/01/2020 Interest payable A/c ----- Dr 30000 To, Cash A/C |(Being interest payable for year 2019 is paid) 30000 30000