On January 1, Innovative Solutions, Inc. issued $210,000 in bonds at face value.

Question

On January 1, Innovative Solutions, Inc. issued $210,000 in bonds at face value. The bonds have a stated interest rate of 7 percent. The bonds mature in 10 years and pay interest once per year on December 31. Required: 1,2&3. Complete the required journal entries to record the bond issuance, interest payment on December 31, early retirement of the bonds. Assume the bonds were retired immediately after the first interest payment at a quoted price of 102. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list 1 Record the issuance of bonds of $210,000 at face value. 2 Record the interest payment on December 31. 3 Record the retirement of the bonds at a quoted price of 102 Credit Notejournal entry has been entered Record entry Clear entry View general journal

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Jan 1 Cash a/c 210000 Bonds payable 210000 (To record issuance of bonds payable) Dec 31 Interest expenses a/c (210000*7%) 14700 Cash a/c 14700 (To record interest paid) Dec 31 Bonds payable 210000 Loss on retirement of bonds 4200 Cash a/c (210000*102/100) 214200 (To record retirement of bonds)

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