Leah Sax, Inc. Issued $10,000,000 of 12% bonds on January 1 which matures 10 yea
ID: 2418856 • Letter: L
Question
Leah Sax, Inc. Issued $10,000,000 of 12% bonds on January 1 which matures 10 years from issuance Interest is payable semi-annually on June 30 and December 31. The entire issuance was purchased by Precious Joseph LLC Prepare journal entries for both Leah Sax, Inc. (seller, issuer, debtor) and for Precious Joseph LLC (buyer, purchaser investor) to record the issuance of the bonds assuming the bonds are issued on March 31 at (Prepare them in the order they are listed on a separate spread sheet)
12% per annum
10% per annum
14% per annum
Prepare journal entries for interest for both the issuer and for the investor at their first quarter and second quarter close on March 31 and June 30 and for the year ended (4th quarter close) close of December 31.
Prepare journal entries for both the issuer and for the investor for the payment and receipt of the cash on June 30 and December 31.
Explanation / Answer
at 12% per annum:
in books of Leah Sax, inc (seller)
1.january cash Dr.10000000
To Bond payable 10000000
(Being 12 % bond issued)
30.June. interest expens(10000000*12%*6/12) Dr 600000
To interest Payable 600000
(Being semi-annually interest due for payment)
interest payable Dr.$600000
To cash 600000
( Being interest due paid off)
31.December interest expense(10000000*12%*6/12) Dr 600000
To interest Payable 600000
(Being semi-annually interest due)
interest payable Dr.$600000
To cash 600000
( Being interest due paid off)
in books of Precious Joseph LLC (buyer)
1. january Investment in Bond Dr.$10000000
To cash $10000000
(Being Bond purchased as investment)
30 june Accrued Interest on Bond (10000000*12%*6/12) Dr.600000
To interest on Bond 600000
(Being interest on bond is due for receiving)
cash Dr.$600000
To accrued interest on Bond 600000
(Being interest on Bond received)
31,December Accrued Interest on Bond (10000000*12%*6/12) Dr.600000
To interest on Bond 600000
(Being interest on bond is due for receiving)
cash Dr.$600000
To accrued interest on Bond 600000
(Being interest on Bond received)
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