Question

for issuance E10.12 (LO 3), AP On August 1, 2022, Gonzaga Corporation issued $600,000, 7 % , 10- year bonds at face value. Interest is payable annually on August 1. Gonzaga's year-end is December 31. nd accrual Instructions Prepare journal entries to record the following events. a. The issuance of the bonds. b. The accrual of interest on December 31, 2022. c. The payment of interest on August 1, 2023.

Answer 1

Interest expense to be recorded on December 31, 2022 = 600,000 x 7% x 5/12

= $17,500

Interest expense to be recorded on August 1, 2023 = 600,000 x 7% x 7/12

= $24,500

Date	General Journal	Debit	Credit
August 1, 2022	Cash	600,000
	Bonds payable		600,000
December 31, 2022	Interest expense	17,500
	Interest payable		17,500
August 1 , 2023	Interest expense	24,500
	Interest payable	17,500
	Cash		42,000

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