On January 1, 2021, Splash City issues $460,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 8%, the bonds will issue at $460,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Question

Rashad Cannon

Business

7 March, 08:11

On January 1, 2021, Splash City issues $460,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Required: Assuming the market interest rate on the issue date is 8%, the bonds will issue at $460,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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Answers (1)

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Jadyn Morrow · Answer 1

The journal entry is shown below:

Explanation:

Journal Entry.

Jan. 1 Cash A/c Dr $460,000

To Bonds payable A/c $460,000

(Bond issue is being recorded)

Jun. 30 Interest Expense A/c Dr $18,400

To Cash A/c $18,400 ($460,000*4% = $18,400)

(Interest is being recorded)

Dec. 31 Interest Expense A/c Dr $18,400

To Cash A/c $18,400 ($460,000*4% = $18,400)

(Interest is being recorded)