Question

On January 1, 2017, Brussels Enterprises issues bonds at par dated January 1, 2017, that have a $3,400 000 par value, mature in 4 years, and pay 9% interest semiannually on June 30 and December 31. 1. Record the entry for the issuance of bonds for cash on January 1, 2017. 2. Record the entry for the first semiannual interest payment on June 30, 2017. 3. Record the entry for the second semiannual interest payment on December 31, 2017. 4. Record the entry for the maturity of the bonds on December 31, 2020 (assume semiannual interest is already recorded). pe 14-16 ng bond issuance terest payments, maturity 4.17 Indicate

Answer 1

Brussels Enterprises- Journal entries for Bonds issued and interest payments on bonds:

1. 01.01.2017: Debit: Cash: $3400000

Credit: Bonds (under long term borrowings in liabilities): $3400000

2. 30.06.2017 Debit: Interest paid:$306000

Credit: Cash $ 306000

It is assumed that the interest rate of 9% for semiannual not for the per year.

3. 31.12.2017

Debit: Interest paid:$ 306000

Credit: Cash: $306000

4. 31.12.2020:

Debit: Bonds: $3400000

Credit: Cash: $3400000