Entries for Issuing Bonds Austin Co. produces and distributes semiconductors for
ID: 2355824 • Letter: E
Question
Entries for Issuing Bonds Austin Co. produces and distributes semiconductors for use by computer manufacturers. Austin Co. issued $15,000,000 of 12-year, 12% bonds on May 1 of the current year, 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 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.
May 1
Cash 15,000,000
Bonds Payable 15,000,000
Nov. 1
Interest expense 900,000
Cash 900,000
Dec. 31
______?_____ ____?_____
_____?______ ____?____
Explanation / Answer
May 1 Debit: Cash 15,000,000 Credit: Bonds payable 15,000,000 November 1 Debit: Bond interest expense 900,000 Credit: Cash 900,000 (15,000,000*.12*.5 = 900,000) December 31 Debit: Bond interest expnese 300,000 Credit: Bond interest payable 300,000 (15,000,000*.12*2/12 = 300,000)
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