Question

. Jackson Corporation issued $250,000 of 10-year, 8% bonds at par on January 1, 2000.  Interest is payable on January 1 and July 1. Record the following transactions in the journal below

Transactions for 2000

Jan. 1               Issued $250,000 of 10-year, 8% bonds at par.

Jul. 31             Interest payment.

Dec. 31            Recorded the accrued interest on the bonds. (Interest will be paid next day, which is in another fiscal year)

Transactions for 2010

Jan. 1               Interest payment.

Jul. 1               Interest payment.

Dec. 31            Record the retirement of the bond (pay back the principal to bondholders)

Date	Accounts	Debit	Credit

Answer 1

WORKING NOTES:
	CALCULATION OF SEMI ANNUALLY INTEREST EXPENSES
	Bonds Par Value	$2,50,000
	Interest @ 8%	$20,000
	Interest Expenses semin annually = $ 20,000 / 2	$10,000
SOLUTION:
Journal Entries
Transaction for 2000
Date	General Journal	Debit	Credit
Jan, 01	Cash	$2,50,000
	Bond Payable		$2,50,000
July, 31	Interest Expenses	$10,000
	Cash		$10,000
Dec, 31	Interest Expenses	$10,000
	Interest Payable		$10,000
Transaction for 2010
Date	General Journal	Debit	Credit
Jan, 01	Interest Payable	$10,000
	Cash		$10,000
July, 31	Interest Expenses	$10,000
	Cash		$10,000
Dec, 31	Bond Payable	$2,50,000
	Cash		$2,50,000