Problem 15-1A On May 1 statements are prepared annually on December 31. 1, 2017,
ID: 2339357 • Letter: P
Question
Problem 15-1A On May 1 statements are prepared annually on December 31. 1, 2017, Herron Corp. issued $860,000 12%, 5-year bonds at face value. The bonds were dated May 1, 2017 , and pay interest annually on May 1. Financial journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not Account Titles and Explanation indent manuall Date May 1, 2017 SHOW LST OF ACCOINTS Prepare the adjusting entry to record the accrual of interest on December 31, 2017. indent manually. Round answers to 0 decimal places,e.g. 5,675 redl account ites are autonaticaly Indented when amount is entere Date Account Titles and Explanation Debit Credit Dec. 31, 2017Explanation / Answer
Journal Entries Date Accounts title and explanation Debit $ Credit $ 01.05.17 Cash accouont Dr. 860000 Bonds payable 860000 31.12.17 Interest expense Dr. (860000*12% *8/12) 68800 Interest payable 68800 Balance Sheet: Current liabilities: Interest payable 68800 Long terem liabilities: Bonds payable 860000 Journal entries for 2018 Date Accounts title and explanation Debit $ Credit $ 01.05.18 Interest expense Dr. (860000*12%*4/12) 34400 Interest payable Dr. 68800 Cash account 103200 31.12.18 Interest expense Dr. (860000*12% *8/12) 68800 Interest payable 68800 01.01.19 Interest payable Dr. 68800 cash account 68800 01.01.19 Bonds payable Dr. 860000 loss on redemption of bonds Dr. 8600 Cash account 868600