Questions 54 and 55 refer to the following information Jovany Creek, Inc. issued

Question

Questions 54 and 55 refer to the following information Jovany Creek, Inc. issued a $100,000,000 20 year B? at par.It year, interest expense monthly is a semiannual bond with interest paid twice a due on June 30th and December 31. The Company accrues . The entry to record the sale of the bond would include a: 100, 000,000 credit to Cash. b$100,000, 000 debit to Accounts Payable. C. $20,000,000 credit to Bonds Payable. d $100, 000,000 credit to Bonds Payable. 55. The entry to record the payment of the semiannual interest due to the bond holders is: a. Interest Expense 8,000,000 Cash 8,000,000 b. Interest Payable 4,000,000 Cash 4,000,000 c. Interest Expense 8,000,000 Interest Payable 8,000,000 d. Interest Expense 4,000,000 Interest Payable 4,000,000 Page 21 of 39

Explanation / Answer

Solution:

54. d. $100,000,000 credit to bonds payable

Explanation:

Journal entry

Cash Dr. $100,000,000

To bond payable. $100,000,000

55. b. Interest payable Dr $4,000,000

To cash. $4,000,000

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