Question

See below. Would love a breakdown of calculations that are clear so I can understand.

Problem 15-01A a-f (Video) On May 1, 2020, Wildhorse Corp. issued $600,000, 10, 5-year bonds at face value. The bonds were dated May 1, 2020, and pay interest annually on May 1. Financial statements are prepared annually on 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 Credit May 1, 2020 Debit LINK TO TEXT LINK TO TEXT Prepare the adjusting entry to record the accrual of interest on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,675.) Date Account Titles and Explanation Debit Credit Dec 31, 2020 LINK TO TEXT LINK TO TEXT

Answer 1

Credit Date May 1, 2020 Account titles and Explanation Cash Bonds Payable Debit $600,000 $600,000 Credit Date Account titles and Explanation December 31,2020 Interest Expenses Interest Payable Debit $ 40,000 $ 40,000 Working Notes: Interest expenses = $600,000*10%*8/12 = $40,000 Wildhorse Corp. Balance sheet (Partial) December 31,2020 Current Liabilities Interest Payable $ 40,000 Long Term Liabilities Bonds payable $600,000

Date May.1,2021 Account titles and Explanation Debit Credit Interest Expenses $ 40,000 Interest Payable $ 20,000 Cash $ 60,000 Working Notes: Interest Expenses = $600,000*10%*4/12 = $20,000 Cash = $40,000+$20,000 = $60,000 Credit Date Account titles and Explanation December 31,2021 Interest Expenses Interest Payable Debit $ 40,000 $ 40,000 Working Notes: Interest expenses = $600,000*10%*8/12 = $40,000 Credit Date Jan.1, 2022 Debit $ 40,000 $ 40,000 Account titles and Explanation Interest Payable Cash (To record payment of interest) Bonds Payable Loss on Bond redemption Cash (To record redemption of bonds) Jan.1,2022 $600,000 $ 30,000 $630,000 Working Notes: Loss on Bond Redemption = $600,000*5/100 = $30,000 Cash = $600,000+$30,000 = $630,000