Bonds Payable Journal Entries; Issued at Par Plus Accrued InterestAskew, Inc., which closes its books on December 31, is authorized to issue $700,000 of nine percent, 15-year bonds dated May 1, with interest payments on November 1 and May 1.RequiredPrepare 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 $500,000 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. General Journal Date Description Debit Credit a. Oct.1 AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer 0 Bonds Payable 0 700000 AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement 0 Answer Issuance of bonds at 100 plus accrued interest. Answer Answer b. Nov.1 Bond Interest Payable Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer To record semiannual interest payment. c. Dec.31 AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer To accrue interest expense. d. May 1 Bond Interest Payable Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer To record semiannual interest payment. e. May 1 Bonds Payable Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer To record retirement of bonds.

Bonds Payable Journal Entries; Issued at Par Plus Accrued InterestAskew, Inc., which closes its books on December 31, is authorized to issue $700,000 of nine percent, 15-year bonds dated May 1, with interest payments on November 1 and May 1.RequiredPrepare 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 $500,000 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. General Journal Date Description Debit Credit a. Oct.1 AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer 0 Bonds Payable 0 700000 AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement 0 Answer Issuance of bonds at 100 plus accrued interest. Answer Answer b. Nov.1 Bond Interest Payable Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer To record semiannual interest payment. c. Dec.31 AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer To accrue interest expense. d. May 1 Bond Interest Payable Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer To record semiannual interest payment. e. May 1 Bonds Payable Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement Answer Answer To record retirement of bonds.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5PB: Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...

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Question

Bonds Payable Journal Entries; Issued at Par Plus Accrued Interest
Askew, Inc., which closes its books on December 31, is authorized to issue $700,000 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 $500,000 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.

General Journal
Date	Description	Debit	Credit
a.
Oct.1	AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement	Answer	0
	Bonds Payable	0	700000
	AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement	0	Answer
	Issuance of bonds at 100 plus accrued interest.	Answer	Answer
b.
Nov.1	Bond Interest Payable	Answer
	AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement	Answer	Answer
	AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement	Answer	Answer
	To record semiannual interest payment.
c.
Dec.31	AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement	Answer	Answer
	AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement	Answer	Answer
	To accrue interest expense.
d.
May 1	Bond Interest Payable	Answer	Answer
	AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement	Answer	Answer
	AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement	Answer	Answer
	To record semiannual interest payment.
e.
May 1	Bonds Payable	Answer	Answer
	AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement	Answer	Answer
	AnswerCashBonds PayableBond Interest PayableBond Interest ExpenseLoss on Bond Retirement	Answer	Answer
	To record retirement of bonds.

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