On January 1, Altman Company issued bonds that had a par value of $860,000 with a...
On January 1, Altman Company issued bonds that had a par value of $860,000 with a stated interest rate of 5% and a 5 year maturity date. The bonds pay interest semiannually on June 30 and December 31.
The bonds are issue at par value. Record the journal entries Altman Company must record in its books at bond issuance, the first interest payment date, and at bond maturity.
| Date | Description | Debit | Credit |
|---|---|---|---|
| 01/01 | |||
| to record the sale of bonds at par value | |||
| 06/30 | |||
| to record the semi-annual interest payment on bonds | |||
| 01/01/yr 5 | |||
| to record the maturity of bonds | |||
Homework Answers
Journal entry :
| Date | accounts & explanation | debit | credit |
| 01/01 | Cash | 860000 | |
| Bonds payable | 860000 | ||
| (to record the sale of bonds at par value) | |||
| 06/30 | Interest expense (860000*5%*6/12) | 21500 | |
| Cash | 21500 | ||
| (to record the semi-annual interest payment on bonds) | |||
| 01/01 yr 5 | Bonds payable | 860000 | |
| Cash | 860000 | ||
| (To record maturity of bonds) | |||
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