Instructions General Journal onds Issued at Face Value R & R Collectibles issued

Question

Instructions General Journal onds Issued at Face Value R & R Collectibles issued the following bonds: Date of issue and sale: April 1, 20-1 Principal amount Sale price of bonds Denomination of bonds: $1,000 Life of bonds: Stated rate: 1. Prepare journal entries for: a. Issuance of the bonds b. Interest payment on the bonds on September 30, c. Year-end adjustment on the bonds. $580,000 100 10 years 8%, payable semiannually on September 30 and March 31 f an amount box does not require an entry, leave it blank.

Explanation / Answer

Journal entries: Date Accounts title and explanations Deit $ Crredit $ a. Cash account 580000      Bonds payable 580000 b. Interest expense Dr. 23200     Cash account (580000*8% *6/12) 23200 c. Interest expense Dr. 11600        Interest payable 11600

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