Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

Q6SE_2

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 656

Short Answer

Journalizing bond transactions

Power Company issued a $1,000,000, 5%, 5-year bond payable at face value on

January 1, 2018. Interest is paid semiannually on January 1 and July 1.

Requirements

1. Journalize the issuance of the bond payable on January 1, 2018.

2. Journalize the payment of semiannual interest on July 1, 2018.

Answer:

The interest expense account is debited with $25,000 and the cash account is

credited with $25,000.

See the step by step solution

Step by Step Solution

Step 1: Definition of journal entry

Primary entry made by the accounting to record the financial transaction or event in

the books of accounts is journal entry.

Step 2: Journal entry of the issue of bond

DateParticularsDebitCredit
July 1, 2018Interest Expense$25,000
Cash$25,000

(Being entry for the payment of

interest)

Most popular questions for Business-studies Textbooks

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.