On January 1, Klosterman Company issued S459.000, 13%, 10-year bonds at face val

Question

On January 1, Klosterman Company issued S459.000, 13%, 10-year bonds at face value. Interest is payable semiannually on July 1 and January 1. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Prepare the journal entry to record the payment of interest on July 1, assuming that interest was not accrued on June 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Explanation / Answer

Journal entires in the bookes of Kiosterman Company

Date Point No JOURNAL ENTRIES Debit ($) Credit ($) 1-Jan a FOR Issue of Bond Cash   Dr               459,000 To Bond Payable               459,000 1-Jul b INTEREST PAYAMENT Interest Expenses   Dr                 29,835 To Cash                 29,835 31-Dec c ACCRUAL OF INTEREST Interest Expenses   Dr                 29,835 To Interest Payable                 29,835

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