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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.


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

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


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

July 1, 2018Interest Expense$25,000

(Being entry for the payment of


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