Question

Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson issued $720,000 of 15-year, 11% bonds on May 1 of the current year at face value, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year.

May 1	Issued the bonds for cash at their face amount.
Nov. 1	Paid the interest on the bonds.
Dec. 31	Recorded accrued interest for two months.

Journalize the entries to record the above selected transactions for the current year. If an amount box does not require an entry, leave it blank.

Answer 1

Date	General Journal	Debit ($)	Credit ($)
1-May	Cash A/c	720,000
	To Bonds Payable A/c		720,000
	[Entry to record the Bonds Issuance]
1-Nov	Interest Expenses A/c [$720,000 x 11.00% x 6/12]	39,600
	To Cash A/c		39,600
	[Entry to record the Interest Expenses]
31-Dec	Interest Expenses A/c [$720,000 x 11.00% x 2/12]	13,200
	To Interest Payable A/c		13,200
	[Entry to record the Accrued Interest Expenses]