Meera Corporation issued 3,060, 7%, 5-year, $1,000 bonds dated January 1, 2015,

Question

Meera Corporation issued 3,060, 7%, 5-year, $1,000 bonds dated January 1, 2015, at 100. Prepare the journal entry to record the sale of these bonds on January 1, 2015. (Credit account titles are automatically indented when amount is entered. Do m Debit Date Jan. 1 Account Titles and Explanation Credit Prepare the journal entry to record the first interest payment on July 1, 2015 (interest payable semiannually), assuming no previous accrual of interest. (Credit account is entered. Do not indent manually.) Date Account Titles and Explanation July 1 Debit Credit Prepare the adjusting journal entry on December 31, 2015, to record interest expense. (Credit account titles are automatically indented when amount is entered Date Account Titdes and Explanation Debit Credit Dec. 31

Explanation / Answer

Bond issued at par:

1.

Journal

Date

Accounts and explanation

P.ref

Amount

Amount

1/1/15

Cash

$3,060,000

7% Bonds payable

$3,060,000

To record issue bonds at par

($1,000 × 3,060)

  

2.

Journal for interest

Date

Accounts and explanation

P.ref

Amount

Amount

1/7/15

Interest expense

$107,100

Cash ($3,060,000 × 7% × ½)

$107,100

To record paying the semiannual interest

31/12/15

Interest expense

$107,100

Interest payable ($3,060,000 × 7% × ½)

$107,100

To record adjusting entry at the year-end

Date

Accounts and explanation

P.ref

Amount

Amount

1/1/15

Cash

$3,060,000

7% Bonds payable

$3,060,000

To record issue bonds at par

($1,000 × 3,060)

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