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 $3,200,000 par value, mature in four years, and pay 9% 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). View transaction list Journal entry worksheet < 1 2 3 4 > Record the issuance of bonds for cash on January 1. Note: Enter debits before credits. General Journal Debit Credit Date January 01 Record entry Clear entry View general Journal

Answer 1

1)

Credit Debit Dr. 3200000 Date General Journal 01-01-2019 Cash A/C To 9% Bonds (Being Bonds Issued at Par) 3200000

2)

Date General Journal Debit Credit 30-06-2019 Interest Expense Dr. 144000 To Cash 144000 (Being the first semi-annual Interest payment for 9% Bond) 31-12-2019 Interest Expense Dr. 144000 To Cash 144000 (Being the Second semi-annual Interest payment for 9% Bond)

3)

Date General Journal Debit Credit 31-12-2022 9% Bonds 3200000 To Cash 3200000 (Being repayment of face value of bond at maturity)

In the above case, the entries have been made understanding that the Bonds are issued at Par.