Question

Hunter Corp. issued 8% fifteen​-year bonds payable with a face amount of $50,000 when the market interest rate was 8%. Hunter​'s fiscal​ year-end on December 31. The bonds pay interest on January 1 and July 1.

Required:
Journalize the following transactions for Hunter.
a. Issuance of the bonds payable at par on July​ 1, 2018
b. Accrual of interest expense on December​ 31, 2018
c. Payment of cash interest on January​ 1, 2019
d. Payment of the bonds payable at maturity​ (give the​ date)

Answer 1

Solution:

Journal Entries - Hunter Corp.
Event	Date	Particulars	Debit	Credit
a	1-Jul-18	Cash Dr	$50,000.00
		To Bond Payable		$50,000.00
		(To record issue of bond at par)
b	31-Dec-18	Interest Expense Dr	$2,000.00
		To Interest Payable ($50,000*8%*6/12)		$2,000.00
		(To record accrual of interest expense)
c	1-Jan-19	Interest payable Dr	$2,000.00
		To Cash		$2,000.00
		(To record payment of interest)
d	1-Jul-33	Bond Payable Dr	$50,000.00
		To Cash		$50,000.00
		(To record bond payment at maturity)