Question 4 On January 1, Klosterman Company issued $482,000, 13%, 10-year bonds

Question

Question 4

On January 1, Klosterman Company issued $482,000, 13%, 10-year bonds at face value. Interest is payable semiannually on July 1 and January 1.

Date

Account Titles and Explanation

Debit

Credit

Jan. 1

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Date

Account Titles and Explanation

Debit

Credit

July 1

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Date

Account Titles and Explanation

Debit

Credit

Dec. 31

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Question 4

On January 1, Klosterman Company issued $482,000, 13%, 10-year bonds at face value. Interest is payable semiannually on July 1 and January 1.

Explanation / Answer

1) Issuance of Bonds Date Particulars Dr/Cr Debit Credit Jan-01 Cash A/c Dr 482000 To 13% 10 year Bonds Payble Cr 482000 2) Interest Payble Date Particulars Dr/Cr Debit Credit 1-Jul Interest Expense Dr 31330 To cash Cr 31330 (Being Interest paid) 31-Dec Interest Expense Dr 31330 To Interest Payble Cr 31330 (being Interest accrued)

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