Question

Dallas Clothing Company issued $400,000 of 6% serial bonds on July 1, 2019, at face value. The bonds are dated July 1, 2019; they call for semiannual interest payments on July 1 and January 1; and they mature at the rate of $100,000 per year, with the first maturity date falling on July 1, 2020. The company's accounting period ends on September 30.

Answer 1

			Debit ($)	Credit($)
A	Jul-19	Cash	400000
		Bonds payable		400000
B	Sep-19	Bond interest expene a/c (400000 × 6%× 3/12)	6000
		Interest payable		6000
C	Jan-20	Bond interest exp account	6000
		Interest payable	6000
		cash		12000
D	Jul-20	Bond interest expense account	12000
		Cash		12000
E	Jul-20	Bonds payable account	100000
		cash		100000
		(Maturing of $100000 bonds)
F	Sep-20	Bond interest expense account ( $300000 × 6% × 3/12)	4500
		Interest payable		4500