Question

Question 1

Issuing Bonds at Face Amount On January 1, the first day of the fiscal year, Designer Fabric Inc. issues a $250,000, 9%, 10-year bond that pays semiannual interest of $11,250 ($250,000 x 9% x V2 year), receiving cash of $250,000. (a) Journalize the entry to record the issuance of the bonds. If an amount box does not require an entry, leave it blank. Cash Bonds Payable Feedback (b) Journalize the entry to record the first interest payment on June 30. If an amount box does not require an entry, leave it blank. Interest Expense Cash Feedback (c) Journalize the entry to record the payment of the principal on the maturity date. If an amount box does not require an entry, leave it blank. Bonds Payable Cash

Answer 1

Journal Entries Date Account Title and Explaination Debit Credit Post. Ref. $ 250,000.00 Jan. 1 Cash Bonds Payable (To record Bonds issued at Face Value) $ 250,000.00 $ 11,250.00 b Jun.30 Interest Expense ($250000x9%x1/2yr) Cash (To record Semi annual interest on Bonds paid) $ 11,250.00 $ 250,000.00 Bonds Payable Cash (To record payment of Principle on Maturity Date) $ 250,000.00