Question

Exercise 10-14 Tarawa Umited issued 51,340,000 of 10-year, 5% bonds on January 1, 2016, when the market Interest rate was 5%. Tarawa recelved $1,240,326 when the bonds were issued. Interest is payable semi-annually on July 1 and January 1. Tarawa has a December 31 year end. Record the issue of the bonds on January 1. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jar. 1 SH LIST OF ALLUUNIS Record the payment of Interest on July 1. (Round answers to o decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 1 SHOW LIST OF ACCOUNTS LINK TO TEXT Record the accrual of interest on December 31. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 SHROW IISTOT Prove the amount of cash received when the bands were sold by determining the bands' present value (issue price) on January 1, 2018. Prave the carrying amount of the bonds, one year later, by determining the present value of the bands at that time. (Round answers to O decimal places, e.g. 5,275.) Bonds' present value (issue price) on January 2, 2018 Present value of the bonds

Answer 1

Sr Nr	Particulars	Debit	Credit
1	Cash	1,240,326
	Discount on bonds payable	99,674
	5% Bonds payable		1,340,000
2	Interest Payable	33,500
	Bank/Cash		33,500
3	Interest expenses	33,500
	Interest Payable		33,500