Question

On February 1, 2021, Fox Corporation issued 9% bonds dated February 1, 2021. with a face amount of $290,000. The bonds sold for $265,121 and mature in 20 years. The effective interest rate for these bonds was 10%. Interest is paid semiannually on July 31 and January 31. Fox's fiscal year is the calendar year. Fox uses the straight-line method of amortization. Required: 1. Prepare the journal entry to record the bond issuance on February 1, 2021. 2. Prepare the entry to record interest on July 31, 2021. 3. Prepare the necessary journal entry on December 31, 2021. 4. Prepare the necessary journal entry on January 31, 2022. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare the journal entry to record the bond issuance on February 1, 2021. (i no entry is required for a transaction/event, select "No Journal entry required in the first account field.) View transaction list

On February 1,2021, Fox Corp. issued 9%bonds dated February 1,2021, with a face amount of $290000.

Answer 1

Recording of journal entries are as follows:-

Credit Date Account Titles Feb 01, 2021 Cash Discount on bonds payable Bonds payable (Recording issuance of bonds) $ $ Debit 2,65,121.00 24,879.00 $ 2,90,000.00 15,121.98 July 31, 2021 Interest expense $ Discount on bonds payable ($24,879/20 * 6/12) Cash ($290,000 * 10% * 6/12) (Recording interest paid on July 31, 2021) 621.98 14,500.00 $ $ 12,601.65 Dec 31, 2021 Interest expense Discount on bonds payable ($24,879 /20 * 5/12) Interest payable ($290,000 * 10% * 5/12) (Recording interest expense on Dec 31, 2021) 518.31 12,083.33 $ $ $ 2,520.33 12,083.33 Jan 01, 2022 Interest expense Interest payable Discount on bonds payable Cash ($290,000 * 10% * 6/12) (Recording payment of interest on Jan 01) 103.66 14,500.00 $