Question

extra gold corporation had $ 1290000 8.0 % bond available for issue on sep 1 2020 interest is paid quartely begining nov. 30 all of bonds wes issued at par on oct 1
prepare the appropriate entries
a oct 1 2020
b nov. 30 2020
c dec. 31 2020 extra gold year end
d feb 28 2021

Answer 1

Solution:

Journal Entries in the books of Extra Gold Corporation:

Date	Account titles and Explanation	Debit	Credit
Oct. 1,2020	Cash	$       1,290,000
	Bonds Payable		$           1,290,000
	( To record bonds issue)
Nov. 30, 2020	Interest Expense [1290000*8%*2 M /12 M]	$             17,200
	Cash		$                 17,200
	( To record interest expense)
Dec. 31, 2020	Interest Expense [1290000*8%*1 M /12 M]	$               8,600
	Interest Payable		$                   8,600
	( To record interest expense payable)
Feb. 28, 2021	Interest Payable	$               8,600
	Interest Expense [1290000*8%*2 M /12 M]	$             17,200
	Cash [1290000*8%*3 M /12 M]		$                 25,800
	( To record interest expense paid)