Question

On May 1, 2020, Carla Vista Corp. issued $630,000, 10 %6, 5-year bonds at face value. The bonds were dated May 1, 2020, and pay interest annually on May 1. Financial statements are prepared annually on December 31. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented whe amount is entered. Do not indent manually.) Account Titles and Explanation Date Debit Credit May 1, 2020 SHOW LIST OF ACCOUNTS LNK то TEXT LINK TO TEXY Prepare the adjusting entry to record the accrual of interest on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,675.) Credit Account Titles and Explanation Debit Date Dec. 31, 2020 SHOW LIST OF ACCOUNTS INK TO TEXT LINK TO TEXY tound ansuers to 0 decimal places, e.g. 5,675.)

Answer 1

Date	Accounts Title	Dr	Cr
May 1 2020	Cash	$630,000
	Bonds Payable		$630,000
	(being bond payable issued)
Dec 31 2020	Interest expenses	$42,000
	Interest payable (630000*10%*8/12)		$42,000
	(being interest accrued)
	Balance Sheet (Partial)
	At the year ended December 31 2020
	Current Liabilities
	Interest payable	$42,000
	Long term Liabilities
	Bonds Payable	$630,000
May 1 2020	Interest expenses (630000*10%*4/12)	$21,000
	Interest payable	$42,000
	Cash		$63,000
Dec 31 2021	Interest expenses	$42,000
	Interest payable (630000*10%*8/12)		$42,000
	(being interest accrued)
Jan 1 2022	Interest payable (630000*10%*8/12)	$42,000
	Cash		$42,000
Jan 1 2022	Bonds payable	$630,000
	Loss on redemption of bonds (630000/100*4)	25200
	Cash		$655,200
If any doubt please comment