Exercise 10-1 Recording bond issuance and interest LO P1 On January 1, 2015, Bos
ID: 2527519 • Letter: E
Question
Exercise 10-1 Recording bond issuance and interest LO P1 On January 1, 2015, Boston Enterprises issues bonds that have a $1,850,000 par value, mature in 20 years, and pay 7% interest semiannually on June 30 and December 31. The bonds are sold at par. 1.How much interest will Boston pay (in cash) to the bondholders every six months? Par (maturity) Value Semiannual Semiannual Cash Interest Rate Payment 2. Prepare journal entries to record (a) the issuance of bonds on January 1, 2015; (b) the first interest payment on June 30, 2015; and (c) the second interest payment on December 31, 2015 View transaction list Journal entry worksheet Record the issue of bonds at par on January 1, 2015. Note: Enter debits before credits. Debit Credit Date Jan 01, 2015 General Journal Record entry Clear entry View general journalExplanation / Answer
1) Interest payment = 1850000*3.5% = 64750
2) Journal entry :
3) Journal entry ;
Date accounts & explanation debit credit Jan 1,2015 Cash 1850000 Bonds payable 1850000 (To record issue bonds payable) June 30,2015 Interest expense 64750 Cash 64750 (To record interest paid) Dec 31,2015 Interest expense 64750 Cash 64750 (To record interest paid)Related Questions
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