Question

On January 1,Crane Company issued $372,000, 7% , 10-year bonds at face value. Interest is payable annually on January 1 Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 eTextbook and Media List of Accounts Prepare the journal entry to record the accrual of interest on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Account Titles and Explanation Debit Credit Dec. 31 eTextbook and Media List of Accounts Prepare the journal entry to record the payment of interest on January 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Credit Debit Date Jan. 1

Answer 1

Solution:

Journal Entries - Crane Company
Date	Particulars	Debit	Credit
1-Jan	Cash Dr	$372,000.00
	To Bond Payable		$372,000.00
	(To record issue of bonds)
31-Dec	Interest expense Dr	$26,040.00
	To Interest payable		$26,040.00
	(To record interest accrual)
1-Jan	Interest payable Dr	$26,040.00
	To Cash		$26,040.00
	(To record interest payment)