Question

On the first day of the fiscal year, a company issues a $920,000, 7%, 5-year bond that pays semiannual interest of $32,200 ($920,000 × 7% × 1/2), receiving cash of $884,174.

	Required:
	Journalize the entry to record the issuance of the bonds. Refer to the Chart of Accounts for exact wording of account titles.

Chart Of Accounts

CHART OF ACCOUNTS
General Ledger
ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Notes Receivable 115 Interest Receivable 121 Inventory 122 Supplies 131 Prepaid Insurance 140 Land 151 Building 152 Accumulated Depreciation-Building 153 Equipment 154 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 241 Notes Payable 242 Interest Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends	REVENUE 410 Sales 610 Interest Revenue 611 Gain on Redemption of Bonds EXPENSES 510 Cost of Goods Sold 511 Bad Debt Expense 512 Credit Card Expense 513 Cash Short and Over 521 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Repairs Expense 534 Rent Expense 535 Insurance Expense 536 Supplies Expense 551 Depreciation Expense-Building 552 Depreciation Expense-Equipment 590 Miscellaneous Expense 710 Interest Expense 711 Loss on Redemption of Bonds

General Journal

Journalize the entry to record the issuance of the bonds on July 1. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3

Answer 1

Journal Entries Accounting Equation Date Account Title and Explaination Post. Ref. Debit (S) Credit (S) Assets Liabilities Equity $ $ 884,174.00 35,826.00 | $ 920,000.00 S 920,000.00 S . Cash Discount on Bonds Payable Bonds Payable (To record issue of Bonds for cash) $ 920,000.00