Exercise 14-3 Presented below are two independent situations. I. On January 1, 2

Question

Exercise 14-3 Presented below are two independent situations. I. On January 1, 2017, Headland Company issued $300,000 of 8%, 10-year bonds at par Interest is payable quarterly on April 1, July 1, October 1, and January 1. 2. On June 1, 2017, sage Company issued $252,000 of 10%, 10-year bonds dated January 1 at par plus accrued interest. Interest is payable semiannually on July 1 and January 1. onApr.My oflon, 10yearbonardatedJanuary 1 For each of these two independent situations, prepare journal entries to record the following. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. (a) The issuance of the bonds. (b) The payment of interest on July 1 (c) The accrual of interest on December 31.

Explanation / Answer

Ans. 1. Journal Entries of Headland Company

Ans.2 Journal Entries for Saga Company

DATE DESCRIPTION DEBIT CREDIT 01/01/2017 Cash $300,000 To Bonds Payable $300,000 01/07/2017 Interest Expenses $6,750 To Cash $6,750 ($300,000 x 2.25%(9/4) ) 31/12/2017 Interest Expenses $6,750 To Interest Payable $6,750

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