Question

In: Accounting

Journalize the issuance of the bonds on June 30.

 

Question: Journalizing bond issuance and interest payments

On June 30, Parker Company issued 11%, five-year bonds payable with a face value

of $120,000. The bonds are issued at face value and pay interest on June 30 and

December 31.

Requirements

1. Journalize the issuance of the bonds on June 30.

2. Journalize the semiannual interest payment on December 31

Solutions

Expert Solution

 

Step 1: Definition of the bond

The bond is a type of long-term liability that the company issues to complete the need for a large amount of money.

Step 2: Journal entry of the issue of bond

Date

Particulars

Debit

Credit

June 30

Cash

$120,000

 

 

11% Bonds Payable

 

$120,000

 

(Being entry is made to record the issue of the bond)

 

 

 

 

 

 

 

Date

Particulars

Debit

Credit

December 31

Interest Expense

$6,600

 

 

Cash

 

$6,600

 

(Entry for the payment of interest)

 

 

 

 

 

 


 

The cash account is debited with $120,000, and the bonds payable account is credited with $120,000.

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