Bonds Payable Journal Entries; Issued at Par Plus Accrued Interest Askew, Inc., which closes its books on December 31, is authorized to issue $900,000 of nine percent, 15-year bonds dated May 1, with interest payments on November 1 and May 1. Required Prepare journal entries to record the following events, assuming that the bonds were sold at 100 plus accrued interest on October 1: a. The bond issuance. b. Payment of the first semiannual period's interest on November 1. c. Accrual of bond interest expense at December 31. d. Payment of the semiannual interest on May 1 of the following year. e. Retirement of $400,000 of the bonds at 101 on May 1, Year 2 (immediately after the interest payment on that date). Round to the nearest dollar. Use 360 days for calculations. Date General Journal Description Oct.1 Cash b. Bonds Payable Bond Interest Payable Issuance of bonds at 100 plus accrued interest. Nov.1 Bond Interest Payable Bond Interest Expense c. Cash To record semiannual interest payment. Dec 31 Bond Interest Expense d. Bond Interest Payable To accrue interest expense. May 1 Bond Interest Payable e Bond Interest Expense Cash To record semiannual interest payment. May 1 Bonds Payable Loss on Bond Retirement Cash To record retirement of bonds. Check ° Debit Credit 0 x $ 0 х 0✓ 0 x 0✓ 0 x 0✓ 0✓ 0 x 0 х 0✓ 0 x 0 x 0✓ 0 x 0✓ ÷ 0✓ 0 x = 0 x 0✓
Bonds Payable Journal Entries; Issued at Par Plus Accrued Interest Askew, Inc., which closes its books on December 31, is authorized to issue $900,000 of nine percent, 15-year bonds dated May 1, with interest payments on November 1 and May 1. Required Prepare journal entries to record the following events, assuming that the bonds were sold at 100 plus accrued interest on October 1: a. The bond issuance. b. Payment of the first semiannual period's interest on November 1. c. Accrual of bond interest expense at December 31. d. Payment of the semiannual interest on May 1 of the following year. e. Retirement of $400,000 of the bonds at 101 on May 1, Year 2 (immediately after the interest payment on that date). Round to the nearest dollar. Use 360 days for calculations. Date General Journal Description Oct.1 Cash b. Bonds Payable Bond Interest Payable Issuance of bonds at 100 plus accrued interest. Nov.1 Bond Interest Payable Bond Interest Expense c. Cash To record semiannual interest payment. Dec 31 Bond Interest Expense d. Bond Interest Payable To accrue interest expense. May 1 Bond Interest Payable e Bond Interest Expense Cash To record semiannual interest payment. May 1 Bonds Payable Loss on Bond Retirement Cash To record retirement of bonds. Check ° Debit Credit 0 x $ 0 х 0✓ 0 x 0✓ 0 x 0✓ 0✓ 0 x 0 х 0✓ 0 x 0 x 0✓ 0 x 0✓ ÷ 0✓ 0 x = 0 x 0✓
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Bonds Payable Journal Entries; Issued at Par Plus Accrued Interest
Askew, Inc., which closes its books on December 31, is authorized to issue $900,000 of nine percent, 15-year bonds dated May 1, with interest payments on November 1 and May 1.
Required
Prepare journal entries to record the following events, assuming that the bonds were sold at 100 plus accrued interest on October 1:
a. The bond issuance.
b. Payment of the first semiannual period's interest on November 1.
c. Accrual of bond interest expense at December 31.
d. Payment of the semiannual interest on May 1 of the following year.
e. Retirement of $400,000 of the bonds at 101 on May 1, Year 2 (immediately after the interest payment on that date). Round to the nearest dollar. Use 360 days for calculations.
Date
a.
General Journal
Description
Oct.1 Cash
Bonds Payable
Bond Interest Payable
Issuance of bonds at 100 plus accrued interest.
b.
Nov.1
Bond Interest Payable
Bond Interest Expense
Cash
C.
To record semiannual interest payment.
Dec.31 Bond Interest Expense
Debit
Credit
$
0 x $
0✓
0✓
0 ×
0 ✓
0 ×
0 ×
0
÷
0 %
0 ✓
÷
0 ✓
0 ×
> > *
Bond Interest Payable
÷
=
To accrue interest expense.
d.
May 1
Bond Interest Payable
Bond Interest Expense
Cash
To record semiannual interest payment.
e.
May 1
Bonds Payable
Loss on Bond Retirement
Check
Cash
To record retirement of bonds.
> >
0 %
0 ✓
0 ✓
0 x
0 ×
0 ✓
=
0 ×
0 ✓
0 ✓
0 ×
0 ×
0 ✓
=
0 %
0 ✓
÷
0 ✓
0 x
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