On January 1, the first day of the fiscal year, Designer Fabric Inc. issues a $650,000, 10%, 10-year bond that pays semiannual interest of $32,500 ($650,000 x 10% x ½ year), receiving cash of $650,000.Journalize the entries to record (a) the issuance of the bonds, (b) the first interest payment on June 30, and (c) the payment of the principal on the maturity date of December 31 on page 11. Refer to the Chart of Accounts for exact wording of account titles. Chart of Accounts CHART OF ACCOUNTSDesigner Fabric Inc.General Ledger ASSETS110Cash111Petty Cash121Accounts Receivable122Allowance for Doubtful Accounts126Interest Receivable127Notes Receivable131Merchandise Inventory141Office Supplies191Land194Office Equipment195Accumulated Depreciation-Office Equipment LIABILITIES210Accounts Payable221Salaries Payable231Sales Tax Payable232Interest Payable241Notes Payable251Bonds Payable252Discount on Bonds Payable253Premium on Bonds Payable EQUITY311Common Stock312Paid-In Capital in Excess of Par-Common Stock315Treasury Stock321Preferred Stock322Paid-In Capital in Excess of Par-Preferred Stock331Paid-In Capital from Sale of Treasury Stock340Retained Earnings351Cash Dividends352Stock Dividends REVENUE410Sales610Interest Revenue611Gain on Redemption of Bonds EXPENSES510Cost of Merchandise Sold515Credit Card Expense516Cash Short and Over522Office Salaries Expense531Advertising Expense532Delivery Expense533Repairs Expense535Rent Expense536Insurance Expense537Office Supplies Expense541Bad Debt Expense562Depreciation Expense-Office Equipment590Miscellaneous Expense710Interest Expense711Loss on Redemption of Bonds Journal Journalize the entries to record (a) the issuance of the bonds, (b) the first interest payment on June 30 on page 10, and (c) the payment of the principal on the maturity date of December 31 on page 11. Refer to the Chart of Accounts for exact wording of account titles.

Bond :— It is a type of Debt source of financing that gives fixed periodical interest and principal…

Answered: On January 1, the first day of the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

On January 1, the first day of the fiscal year, Designer Fabric Inc. issues a $650,000, 10%, 10-year bond that pays semiannual interest of $32,500 ($650,000 x 10% x ½ year), receiving cash of $650,000.

Journalize the entries to record (a) the issuance of the bonds, (b) the first interest payment on June 30, and (c) the payment of the principal on the maturity date of December 31 on page 11. Refer to the Chart of Accounts for exact wording of account titles.

Chart of Accounts

CHART OF ACCOUNTS

Designer Fabric Inc.

General Ledger

	ASSETS
110	Cash
111	Petty Cash
121	Accounts Receivable
122	Allowance for Doubtful Accounts
126	Interest Receivable
127	Notes Receivable
131	Merchandise Inventory
141	Office Supplies
191	Land
194	Office Equipment
195	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
221	Salaries Payable
231	Sales Tax Payable
232	Interest Payable
241	Notes Payable
251	Bonds Payable
252	Discount on Bonds Payable
253	Premium on Bonds Payable

	EQUITY
311	Common Stock
312	Paid-In Capital in Excess of Par-Common Stock
315	Treasury Stock
321	Preferred Stock
322	Paid-In Capital in Excess of Par-Preferred Stock
331	Paid-In Capital from Sale of Treasury Stock
340	Retained Earnings
351	Cash Dividends
352	Stock Dividends

	REVENUE
410	Sales
610	Interest Revenue
611	Gain on Redemption of Bonds

	EXPENSES
510	Cost of Merchandise Sold
515	Credit Card Expense
516	Cash Short and Over
522	Office Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Repairs Expense
535	Rent Expense
536	Insurance Expense
537	Office Supplies Expense
541	Bad Debt Expense
562	Depreciation Expense-Office Equipment
590	Miscellaneous Expense
710	Interest Expense
711	Loss on Redemption of Bonds

Journal

Journalize the entries to record (a) the issuance of the bonds, (b) the first interest payment on June 30 on page 10, and (c) the payment of the principal on the maturity date of December 31 on page 11. Refer to the Chart of Accounts for exact wording of account titles.

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions