Question

Exercise 10-2 Recording bond issuance at par, interest payments, and bond maturity LO P1 Brussels Enterprises issues bonds at par dated January 1, 2019, that have a $3,000,000 par value, mature in four years, and pay 8% interest semiannually on June 30 and December 31. 1. Record the entry for the issuance of bonds for cash on January 1. 2. Record the entry for the first semiannual interest payment and the second semiannual interest payment. 3. Record the entry for the maturity of the bonds on December 31, 2022 (assume semiannual interest is already recorded).

Answer 1

ANSWER

1. JANUARY 1, 2019

CASH. DR. $3,000,000

BONDS PAYABLE CR. $3,000,000

2. JUNE 30, 2019   BOND INTEREST EXPENSE DR. $120,000

CASH ($3,000,000 * 4%). CR. $120,000

  DECEMBER 31, 2019 BOND INTEREST EXPENSE DR. $120,000

CASH ($3,000,000 * 4%). CR. $120,000

3. DECEMBER 31, 2022

BONDS PAYABLE DR. $3,000,000

CASH CR $3,000,000