value: 10.00 points 2. Prepare the journal entries related for the above transac

Question

value: 10.00 points 2. Prepare the journal entries related for the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 Schlitterbahn Waterslide Company issued 25,000, 10-year, 5 percent, $100 bonds on January 1 at face value. Interest is payable each December 31. Record the interest payment on December 31. Note: Enter debits before credits. Date General Journal DebitCredit December 31 Record entry Clear entry View general journal

Explanation / Answer

Annual Interest paid in cash = Number of bonds x Par Value x Coupon Rate =               25,000 x $        100 x 5% = $       1,25,000 When Bonds are issued at face value, it means that bonds do not have any discount or premium to amortize. In such case, interest paid in cash is also interest expense. Date General Journal Debit Credit December 31 Interest Expense $ 1,25,000 Cash $ 1,25,000 (To record interest expense at year end)

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