Question

On August 1, 2022, Indigo Corporation issued $504,000, 8 % , 10- year bonds at face value. Interest is payable annually on August 1. Indigo's year-end is December 31 Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Account Titles and Explanation Debit Credit Aug 1 eTextbook and Media List of Accounts Prepare the journal entry to record the accrual of interest on December 31, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Account Titles and Explanation Debit Credit Date Dec. 31 eTextbook and Media List of Accounts Prepare the journal entry to record the payment of interest on August 1, 2023. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Account Titles and Explanation Debit Credit Aug 1 eTextbook and Media List of Accounts

Answer 1

Date Issue Entry 1. Record the Bond Issue General Journal Debit Credit Aug-01 Cash 504000 Bonds Payable 504000 Record the issue of the Bond Reord the Adjustment Entry General Journal Debit Credit Dec-31 Interset Expenses 16800 Interest Paayble 16800 Record the Adjustment entry (504000*8%*5/12) Date Date Credit Journal entris for interest Payment 2. Record the interest First interest General Journal Debit Aug-01 Interest Payable (504000*8%*5/12) Interest Expense(504000*8%*7/12)) Cash (504000*8%). Record the interest Payment on bond 16800 23520 40320