On January 1, 2017, Forrester Company issued $400,000, 896, 5-year bonds at face

Question

On January 1, 2017, Forrester Company issued $400,000, 896, 5-year bonds at face value. Interest is payable annually on January 1. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do Date Account Titles and Explanation Debit Credit Jan. 1, 2017 LINK TO TEXT Prepare the journal entry to record the accrual of interest on December 31, 2017. (Credit account titles are automatically indented when amo Date Account Titles and Explanation Debit Credit Dec. 31, 2017 LINK TO TEXT Prepare the journal entry to record the payment of interest on January 1, 2018. (Credit account titles are automatically indented when amoun Date Account Titles and Explanation Debit Credit Jan. 1, 2018

Explanation / Answer

Debit Credit

Jan 1, 2017 Cash 400,000

Bonds Payable 400,000

To record bonds issues at face value.

Dec 31, 2017 Bond Interest Expense 32,000

Bond Interest Expense Payable. 32,000   

To record accrual of interest.

Jan 1, 2018. Bond Interest Expense Payable 32,000

Cash 32,000

To record payment of interest

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