Question

1. Bonds at Par –

On April 1st 2019, Paul Jones issued at par $180,000 7%, four-year bond. Interest is to be paid quarterly beginning July 1st, 2019. Paul Jones year-end is September 30th.

Record the entry for:

• the issuance of the bond on April 1st 2019

• the first payment of interest

• the year-end adjustment

2. Bonds Issued Between Interest Dates –

Bonds with a par value of $250,000 dated 31st May, and which pay 9% annual interest on June 30th and December 31st, were sold on July 31st at par value. Journalize the entry to record the amount of cash the issuer will receive on 31st July.

3. Bonds at Discount –

JetStar Airlines issued $540,000 of 12%, three-year bond for $526,929 on 1st June 2020 the day the bonds were dated. The market interest rate on this date was 13%. Interest is to be paid semiannually beginning 1st December 2020

Record:

• the issuance of the bonds on June 1st 2020

• payment of interest on December 1st 2020

.

4. Bonds at Premium –

Messner Corporation issued $400,000 of 15%, four-year bond for $418,089 on September 1st 2020, the day the bonds were dated the market interest rate was 13.5%. Interest is paid semiannually beginning March 1st 2021. Messner year-end is December 31st

Record:

1. Issuance of the bonds on September 1st

2. The adjusting entry to accrue bond interest

3. Payment of interest on March 1st 2021

Answer 1