On January 1, 2015, White Water issues $480,000 of 6% bonds, due in 20 years, wi
ID: 2425568 • Letter: O
Question
On January 1, 2015, White Water issues $480,000 of 6% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year.
Assuming the market interest rate on the issue date is 6%, the bonds will issue at $480,000. Record the bond issue on January 1, 2015, and the first two semiannual interest payments on June 30, 2015, and December 31, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
On January 1, 2015, White Water issues $480,000 of 6% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year.
Explanation / Answer
Account Title
Debit
Credit
2015
Jan 1
Cash
$ 480000
Bond payable
$ 480000
June 30
Interest expense
$14400
Interest payable
$14400
Dec 31
Interest expense
$14400
Interest payable
$14400
Cash
$28800
Account Title
Debit
Credit
2015
Jan 1
Cash
$ 480000
Bond payable
$ 480000
June 30
Interest expense
$14400
Interest payable
$14400
Dec 31
Interest expense
$14400
Interest payable
$14400
Cash
$28800
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