Complete the required journal entries to record the bond issuance, interest paym

Question

Complete the required journal entries to record the bond issuance, interest payment on December 31, early retirement of the bonds. Assume the bonds were retired immediately after the first interest payment at a quoted price of 101. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

On January 1, Innovative Solutions, Inc. issued $120,000 in bonds at face value. The bonds have a stated interest rate of 6 percent. The bonds mature in 10 years and pay interest once per year on December 31.

On January 1, Innovative Solutions, Inc. issued $120,000 in bonds at face value. The bonds have a stated interest rate of 6 percent. The bonds mature in 10 years and pay interest once per year on December 31. Required: 1, 2 &3. Complete the required journal entries to record the bond issuance, interest payment on December 31, early retirement of the bonds. Assume the bonds were retired immediately after the first interest payment at a quoted price of 101. (f no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the issuance of bonds of $120,000 at face value. Note: Enter debits before credits. Date General Journal Debit Credit January 01 Record entry Clear entry View general journal

Explanation / Answer

Journal entries :

Date accounts & explanation debit credit Jan 1 Cash 120000 Bonds payable 120000 (To record bond issue) Dec 31 Interest expense (120000*6%) 7200 Cash 7200 (To record interest payment) Dec 31 Bonds payable 120000 Loss on early retirement 1200 Cash (120000*101/100) 121200 (To record early retirement)

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