Exercise 14-3 Presented below are two independent situations. For each of these

Question

Exercise 14-3

Presented below are two independent situations.

For each of these two independent situations, prepare journal entries to record the following. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

1. On January 1, 2017, Kingbird Company issued $360,000 of 9%, 10-year bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1. 2. On June 1, 2017, Oriole Company issued $312,000 of 12%, 10-year bonds dated January 1 at par plus accrued interest. Interest is payable semiannually on July 1 and January 1. Debit Credit 1. Kingbird Company: 2. Oriole Company: Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Kingbrid Company Date Account Titles and Explaination Debit Credit 1-1-2017 Cash $ 3,60,000 Bonds Payable $       3,60,000 7-1-2017 Interest Expense $       8,100 Cash $             8,100 ($3,60,000 X 9% X 3/12) = $8,100 [Note: Interest is payable Quaterly] 12-31-2017 Interest Expense $       8,100 Interest Payable $             8,100 Oriole Company Date Account Titles and Explaination Debit Credit 6-1-2017 Cash $ 3,27,600 Bonds Payable $       3,12,000 Interest Expense $           15,600 ($3,12,000 X 12% X 5/12) = $15,600 [Note: Accrued interest for the period 1st Jan to 1st Jun i.e 5 months] 7-1-2017 Interest Expense $     18,720 Cash $           18,720 ($3,12,000 X 12% X 6/12) = $18,720 [Note: Interest is payable semi-annually] 12-31-2017 Interest Expense $     18,720 Interest Payable $           18,720

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