On January 1, Porter Corporation issued $600,000, 6%, 5-year bonds at 102. Inter
ID: 2507790 • Letter: O
Question
On January 1, Porter Corporation issued $600,000, 6%, 5-year bonds at 102. Interest is payable semiannually on July 1 and January 1.
Instructions
Prepare journal entries to record the
(a) Issuance of the bonds.
(b) Payment of interest on July 1, assuming no previous accrual of interest.
(c) Accrual of interest on December 31.
Date
Account
Debit
Credit
Date
Account
Debit
Credit
Explanation / Answer
a.
Jan 1
Debit: Cash 600,000
Credit: Bonds payable 600,000
b.
July 1
Debit: Bond interest expense 18000
Credit: Cash 18000
c.
Dec 31
Debit: Bond interest expense 18000
Credit: Bonds payable 18000
calculation: 600,000*.06*6/12 = 18000