Question

#9

Pharoah Company issued 2,500, 9%, 5-year, $1,000 bonds dated January 1, 2019, at 100. Interest is paid each January 1.

a. Prepare the journal entry to record the sale of these bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

b. Prepare the adjusting journal entry on December 31, 2019, to record interest expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

c. Prepare the journal entry on January 1, 2020, to record interest paid. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

(a)-Journal entry to record the sale of these bonds on January 1, 2019.

Date	Accounts Tittles and explanations	Debit ($)	Credit ($)
January 1, 2019	Cash A/c	25,00,000
	To Bond Payable A/c		25,00,000
	[Journal Entry to record the sale of these bonds on January 1, 2019] [2500 Bonds x $1,000 per Bond]

(b)-Adjusting journal entry on December 31, 2019, to record interest expense.

Date	Accounts Tittles and explanations	Debit ($)	Credit ($)
December 31, 2019	Bond Interest Expenses A/c	225,000
	To Bond Interest Payable A/c		225,000
	[Entry on December 31, 2019, to record interest expense] [$25,00,000 x 9%]

(c)-Journal entry on January 1, 2020, to record interest paid

Date	Accounts Tittles and explanations	Debit ($)	Credit ($)
January 1, 2020	Bond Interest Payable A/c	225,000
	To Cash A/c		225,000
	[Journal Entry to record the payment of Bond Interest on January 1, 2020]