Question 1 Deleau Equipment Ltd. issued 10%, five-year bonds with a face value o

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Question 1 Deleau Equipment Ltd. issued 10%, five-year bonds with a face value of $84,970,000 on October 1, 2016. The bonds were issued at par and pay interest on March 31 and September 30 each year. Deleau's year end is December 31 Prepare the journal entry for the issuance of the bonds. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanatiorn Oct. 1 Debit Credit Prepare the journal entry required at December 31, 2016, and the entries for the interest payments on March 31 and September 30, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2016 Mar. 31, 2017 Sept. 30, 2017

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Oct 1,2016 Cash 84970000 Bonds payable 84970000 (TO record issue bonds payable) Dec 31,2016 Interest expense (84970000*10%*3/12) 2124250 Interest payable 2124250 (TO record accured interest) Mar 31,2017 Interest payable 2124250 Interest expense 2124250 Cash 4248500 (TO record interest paid) Sep 30,2017 Interest expense 4248500 Cash 4248500 (To record interest paid)

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