Question

Complete the following workout problems with journal entries, showing your work for full credit. Present value tables are available in your textbook, but may also be found easily

Answer 1

Date	Journal Entry	Debit	Credit
01-01-2008	Cash A/c	1000000
		Bonds Payable		1000000
To record bonds issued at face value.
30-06-2008
	Bond Interest Expense (Note1)	50000
		Cash A/c		50000
To record semiannual interest payment.
31-12-2008
	Bond Interest Expense (Note1)	50000
		Cash A/c		50000
To record semiannual interest payment.
30-06-2009
	Bond Interest Expense (Note1)	50000
		Cash A/c		50000
To record semiannual interest payment.
01-07-2009
	Bonds Payable	500000
		Cash A/c		460000
		Gain on Bond Redemption		40000
50% of the Bonds Retired at marketvalue of 92, assumes issued at 100
01-07-2009
	Brokerage Expense	4000
		Cash A/c		4000
To record the brokerages paid, assumes it paid in cash
31-12-2009
	Bond Interest Expense (Note2)	25000
		Cash A/c		25000
To record semiannual interest payment.
Note 1
Bond Issued			1000000
Rate of Interest		10%
Interest Payable		Semi- Annually
Interest for Half Year	50000
Note 2
Bond Issued			1000000
(-) Bond Retired		500000
			500000
Rate of Interest		10%
Interest Payable		Semi- Annually
Interest for Half Year	25000
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