Question

On March 1, 2018, Stratford Lighting issued 12% bonds, dated March 1, with a face amount of $720,000. The bonds sold for $714,000 and mature on February 28, 2038 (20 years). Interest is paid semiannually on August 31 and February 28. Stratford uses the straight-line method and its fiscal year ends December 31.

Required:
1. to 4. Prepare the journal entry to record the issuance of the bonds by Stratford Lighting on March 1, 2018, interest on August 31, 2018, interest on December 31, 2018 and interest on February 28, 2019. (Do not round your intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Date	Descriptions	Debit	Credit
01-Mar	Cash	714000
	Bond Discount	6000
	12% Bonds		720000
31-Aug	Interest Expenses	43200
	Interest Payable		43200
	($720000*12%/2)
31-Dec	Interest Expenses	43500
	Interest Payable		43200
	($720000*12%/2)
	Bond Discount		300
	($6000/20)
28-Feb	No Entry required