Question

Part (3) On January 1, 2019. Power at face value. Interest is pay sem 1, 2019. Power Company issued 1.000.000, 5 %, 5 years bond payah est is pay semi annually on June 30 and December 31. Requirements 1 Record the entry for the issued of the bonds. 2 Record the interest payments for the year 2019. 3 Prepare the final entry to paid back the bonds 2024. On December 31, 2018, when the market interest rate is 6%, BMCC Realty is 700,000 of 6.25%, 10 year bonds payable. The bonds pay interest semiannua BMCC Realty received 713,234 in cash at issuance. Requirements 1 Record the entry for the issued of the bonds. 2 Record the interest payments for the year 2019. 3 Prepare the final entry to paid back the bonds 2028.

Answer 1

Required entries are as prepared below:

Year	Particulars	L.F	Debit ($)	Credit ($)
2019
Jan-01	Cash		1,000,000
	Bond Payable			1,000,000
	(For bonds issued at face value)
Jun-30	Interest Expense (1,000,000*5%*6/12)		25000
	Bank			25000
	(For interest paid)
Dec-31	Interest Expense (1,000,000*5%*6/12)		25000
	Bank			25000
	(For interest paid)
2024
Jan-01	Bond Payable		1,000,000
	Cash			1,000,000
	(For bonds paid)

Required entries are as prepared below:

Year	Particulars	L.F	Debit ($)	Credit ($)
2019
Jan-01	Cash		713,234
	Premium on Bonds Payable			13,234
	Bond Payable			700,000
	(For bonds issued at premium)
Jun-30	Interest Expense (713,234*6%*6/12)		21397
	Premium on Bonds Payable		478
	Bank (700,000*6.25%*6/12)			21875
	(For interest paid)
Dec-31	Interest Expense (712,756*6%*6/12)		21383
	Premium on Bonds Payable		492
	Bank (700,000*6.25%*6/12)			21875
	(For interest paid)
2028
Jan-01	Bond Payable		700,000
	Cash			700,000
	(For bonds paid)