Sweet Ltd. issued a $1,400,000, 10-year bond at par on January 1, 2017. The bond
ID: 2511614 • Letter: S
Question
Sweet Ltd. issued a $1,400,000, 10-year bond at par on January 1, 2017. The bond paid 11.50% interest each January 1 and July 1. The company’s year-end was September 30.
Prepare the journal entries to record the issue of the bond, the payment of interest on July 1, and the September 30 accrual entry. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
Explanation / Answer
Solution :
Journal Entries - Sweet Ltd Date Particulars Debit Credit 1-Jan-17 Cash Dr $1,400,000.00 To Bond Payable $1,400,000.00 (Being issued of bond recorded) 1-Jul-17 Interest Expense Dr ($1,400,000*11.50%*6/12) $80,500.00 To Cash $80,500.00 (Being interest paid on bond) 30-Sep-17 Interest Expense Dr ($1,400,000*11.50%*3/12) $40,250.00 To Interest Payable $40,250.00 (Being interest on bond accrued)Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.