Question

Required information (The following information applies to the questions displayed below.) On January 1, 2021, Splash City issues $380,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 9%, the bonds will issue at $349,051. 2. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Rou your Intermediate and final answers to the nearest whole dollar.) View transaction list Journal entry worksheet inces Record the bond issue. Note: Enter debits before credits Credit Date General Journal January 01, 2021 Cash Discount on Bonds Payable Bonds Payable Debit 349,051 380.000 Record entry Clear entry View general journal

Answer 1

Solution:

Journal Entries
Date	Particulars	Debit	Credit
01-Jan	Cash A/c Dr	$3,49,051
	Discount on Bond Payable Dr	$30,949
	To bonds payable		$3,80,000
	(Being bond issued at discount)
30-Jun	Interest Expense Dr ($349051*9%*6/12)	$15,707
	To Discount on Bond Payable		$507
	To Cash		$15,200
	(To record first semi annual interest payment)
31-Dec	Interest Expense Dr [($349051+ $507)*9%*6/12]	$15,730
	To Discount on Bond Payable		$530
	To Cash		$15,200
	(To record second semi annual interest payment)