Question

On March 1, 2021, Stratford Lighting issued 12% bonds, dated March 1, with a face amount of $720,000. The bonds sold for $714,000 and mature on February 28, 2041 (20 years). Interest is paid semiannually on August 31 and February 28. Stratford uses the straight-line method and its fiscal year ends December 31. Required: 1. to 4. Prepare the journal entries to record the issuance of the bonds by Stratford Lighting on March 1, 2021, interest on August 31, 2021, accrued interest on December 31, 2021 and interest on February 28, 2022. (Do not round your intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
March 01, 2021	Cash	$ 714,000
	Discount on bonds payable ( $ 720,000 (-) $ 6,000 )	$ 6,000
	Bonds payable		$ 720,000
August 31, 2021	Interest expense   - Bal. Fig.	$ 43,350
	Discount on bonds payable                  ( $ 6,000 / 20 years x 1 /2)		$ 150
	Cash                 ( $ 720,000 x 12% x 6 /12 )		$ 43,200
December 31, 2021	Interest expense	$ 28,900
	Discount on bonds payable                  ( $ 6,000 / 20 years x 1 /2 x 4 / 6)		$ 100
	Interest payable                 ( $ 720,000 x 12% x 4 /12 )		$ 28,800
February 28, 2022	Interest expense   - Bal. Fig.	$ 14,450
	Interest payable	$ 28,800
	Discount on bonds payable                  ( $ 6,000 / 20 years x 1 /2 x 2/ 6)		$ 50
	Cash		$ 43,200