Brief Exercise 10-10 Sarasota Corp. issued 2,400 8%, 6-year, $1,000 bonds dated

Question

Brief Exercise 10-10 Sarasota Corp. issued 2,400 8%, 6-year, $1,000 bonds dated January 1, 2017, at face value. Interest is paid each anuary . (a) Prepare the journal entry to record the sale of these bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Jan. 1, 2017 Account Titles and Explanation Debit (b) Prepare the adjusting journal entry on December 31, 2017, to record interest expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Date Dec. 31, 2017 Account Titles and Explanation Debit Credit (c) Prepare the journal entry on January 1, 2018, to record interest paid. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Jan. 1, 2018 Account Titles and Explanation Debit Credit

Explanation / Answer

01-Jan-17 Cash 2400000 (2400*1000)        Bonds payable 2400000 31-Dec-17 Interest expense 192000 (2400000*8%)           Interest payable 192000 01-Jan-18 Interest payable 192000            Cash 192000

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