Question

On January 1, 2018, Carvel Corp. issued five-year bonds with a face value of $640,000 and a coupon interest rate of 6%, with interest payable semi-annually. Assume that the company has a December 31 year end and records adjusting entries annually. (a) Your answer is correct. Record the journal entries relating to the bonds on January 1, July 1, and December 31, assuming that when the bonds were sold, the market interest rate was 5%. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Z Jan. 1 Cash 668008 | Bonds Payable 668008 July 1 Interest Expense 16700 T Bonds Payable 2500 | TCash 19200 Dec 31 Interest Expense 16638 Bonds Payable 256211 Interest Payable T T 19200

Answer 1

Journal entry

Date	account title and explanation	Debit	Credit
Jan 1	Cash	640000
	Bonds payable		640000
July 1	Interest expense	19200
	Cash		19200
Dec 31	Interest expense	19200
	Interest payable		19200