ISSUING BONDS AT A FACE AMOUNT
On January 1, the first day of the fiscal year, a company issues a $700,000, 6%, 10-year bond that pays semiannual interest of $21,000 ($700,000 × 6% × ½ year), receiving cash of $700,000.
(a) Journalize the entry to record the issuance of the bonds.
_________________ ________
_________________ ________
(b) Journalize the entry to record the first interest payment on June 30.
_________________ ________
_________________ ________
(c) Journalize the entry to record the payment of the principal on the maturity date.
__________________ _________
__________________ _________
(a). Recording Issuance of Bonds | |||
Date | Account Tittle and Explanation | Debit | Credit |
Jan. 1 | Cash | $ 700,000 | |
Bonds Payable | $ 700,000 | ||
To record issuance of 6% bonds at face value | |||
(b) Payment of first Semi-annual Interest | |||
Jun. 30 | Interest Expense | $ 210,000 | |
Cash | $ 21,000 | ||
To record payment of semi-annual interest @6% | |||
(c ) Payment of Bond Payable at Maturity date: | |||
After | Bonds Payable | $ 700,000 | |
10 Yr. | Cash | $ 700,000 | |
To record payment of bond at maturity date | |||
ISSUING BONDS AT A FACE AMOUNT On January 1, the first day of the fiscal year,...
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