Question

On March 1, 2015, Sherwin, Inc. issued bonds with a face value of $800,000. The bonds carry a face interest rate of 12 percent that is payable each June 30 and December 31. The bonds were sold at 100. Sherwin's accounting year ends on December 31.

Prepare an entry in journal form without explanation to record the issuance of the bonds on March 1, 2015.

Prepare an entry in journal form without explanation to record the interest payment on June 30, 2015.

Prepare an entry in journal form without explanation to record the interest payment on December 31, 2015

Answer 1

Journal entries are as recorded below:

Year	Particulars	L.F	Debit ($)	Credit ($)
2015
Mar-01	Cash		800,000
	Bonds Payable			800,000
	(For bonds issued at par)
Jun-30	Interest Expense (800,000*12%*4/12)		32,000
	Cash			32,000
	(For interest paid)
Dec-31	Interest Expense (800,000*12%*6/12)		48,000
	Cash			48,000
	(For interest paid)