The Sarasota Company issued $270,000 of 9% bonds on January 1, 2017. The bonds a
ID: 2408149 • Letter: T
Question
The Sarasota Company issued $270,000 of 9% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1 and January 1. The bonds are issued at face value.
Prepare Sarasota’s journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)
No.
Date
Account Titles and Explanation
Debit
Credit
No.
Date
Account Titles and Explanation
Debit
Credit
(a)Jan. 1, 2017July 1, 2017Dec. 31, 2017
(b)Jan. 1, 2017July 1, 2017Dec. 31, 2017
(c)Jan. 1, 2017July 1, 2017Dec. 31, 2017
Explanation / Answer
Answer
Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2017
Cash
$ 2,70,000.00
Bonds Payable
$ 2,70,000.00
(bonds issued at face value)
July 1, 2017
Interest expense -$270,000 x 9% x 6/12)
$ 12,150.00
Cash
$ 12,150.00
(interest expenses paid for 6 months)
Dec. 31, 2017
Interest expense -$270,000 x 9% x 6/12)
$ 12,150.00
Interest payable
$ 12,150.00
(interest expenses accrued for 6 months)
Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2017
Cash
$ 2,70,000.00
Bonds Payable
$ 2,70,000.00
(bonds issued at face value)
July 1, 2017
Interest expense -$270,000 x 9% x 6/12)
$ 12,150.00
Cash
$ 12,150.00
(interest expenses paid for 6 months)
Dec. 31, 2017
Interest expense -$270,000 x 9% x 6/12)
$ 12,150.00
Interest payable
$ 12,150.00
(interest expenses accrued for 6 months)
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