On January 1, Altman Company issued bonds that had a par value of $860,000 with
ID: 2515721 • Letter: O
Question
On January 1, Altman Company issued bonds that had a par value of $860,000 with a stated interest rate of 5% and a 5 year maturity date. The bonds pay interest semiannually on June 30 and December 31.
The bonds are issue at par value. Record the journal entries Altman Company must record in its books at bond issuance, the first interest payment date, and at bond maturity.
Date Description Debit Credit 01/01 to record the sale of bonds at par value 06/30 to record the semi-annual interest payment on bonds 01/01/yr 5 to record the maturity of bondsExplanation / Answer
Journal entry :
Date accounts & explanation debit credit 01/01 Cash 860000 Bonds payable 860000 (to record the sale of bonds at par value) 06/30 Interest expense (860000*5%*6/12) 21500 Cash 21500 (to record the semi-annual interest payment on bonds) 01/01 yr 5 Bonds payable 860000 Cash 860000 (To record maturity of bonds)