For each of the two bonds below record the journal entries at issuance and recor
ID: 2420821 • Letter: F
Question
For each of the two bonds below record the journal entries at issuance and record all entries from 2016 through, and including maturity, January 2021.
1. On April 1, 2016 Sons Inc. issues $5,000,000 of 10% bonds to mature on January 1, 2021. The bonds pay interest on July 1 and January 1. The market rate of interest is 12%.
2. On January 1, 2016, Trust Co. issues $4,000,000 of 9% bonds to mature on January 1, 2021. The bonds pay interest on July 1 and January 1. The market rate of interest is 7%.
Explanation / Answer
1)
In the Books of Sons Inc.
1st April 2016 Bank A/c Dr. $5,000,000
To 10% Bond $5,000,000
(Being 10% bond issued)
1st July 2016 Bank A/c Dr. $125,000
To Interest on Bonds $125,000
(Being Interest for 3 months paid)
1st Jan 2017 Bank A/c Dr. $250,000
To Interest on Bonds $250,000
(Being Interest for 6 months paid)
1st July 2017 Bank A/c Dr. $250,000
To Interest on Bonds $250,000
(Being Interest for 3 months paid)
1st Jan 2018 Bank A/c Dr. $250,000
To Interest on Bonds $250,000
(Being Interest for 6 months paid)
1st July 2018 Bank A/c Dr. $250,000
To Interest on Bonds $250,000
(Being Interest for 6 months paid)
1st Jan 2019 Bank A/c Dr. $250,000
To Interest on Bonds $250,000
(Being Interest for 6 months paid)
1st July 2019 Bank A/c Dr. $250,000
To Interest on Bonds $250,000
(Being Interest for 6 months paid)
1st Jan 2020 Bank A/c Dr. $250,000
To Interest on Bonds $250,000
(Being Interest for 6 months paid)
1st July 2020 Bank A/c Dr. $250,000
To Interest on Bonds $250,000
(Being Interest for 6 months paid)
1st Jan 2021 Bank A/c Dr. $250,000
To Interest on Bonds $250,000
(Being Interest for 6 months paid)
1st Jan 2021 10% Bond A/c Dr. $5,000,000
Bank A/c $5,000,000
(Being Bond Matured)
2) In the Books of Trust Co.
1st Jan 2016 Bank A/c Dr. $4,000,000
To 9% Bond $4,000,000
(Being 10% bond issued)
1st July 2016 Bank A/c Dr. $180,000
To Interest on Bonds $180,000
(Being Interest for 6 months paid)
1st Jan 2017 Bank A/c Dr. $180,000
To Interest on Bonds $180,000
(Being Interest for 6 months paid)
1st July 2017 Bank A/c Dr. $180,000
To Interest on Bonds $180,000
(Being Interest for 6 months paid)
1st Jan 2018 Bank A/c Dr. $180,000
To Interest on Bonds $180,000
(Being Interest for 6 months paid)
1st July 2018 Bank A/c Dr. $180,000
To Interest on Bonds $180,000
(Being Interest for 6 months paid)
1st Jan 2019 Bank A/c Dr. $180,000
To Interest on Bonds $180,000
(Being Interest for 6 months paid)
1st July 2019 Bank A/c Dr. $180,000
To Interest on Bonds $180,000
(Being Interest for 6 months paid)
1st Jan 2020 Bank A/c Dr. $180,000
To Interest on Bonds $180,000
(Being Interest for 6 months paid)
1st July 2020 Bank A/c Dr. $180,000
To Interest on Bonds $180,000
(Being Interest for 6 months paid)
1st Jan 2021 Bank A/c Dr. $180,000
To Interest on Bonds $180,000
(Being Interest for 6 months paid)
1st Jan 2021 10% Bond A/c Dr. $4,000,000
Bank A/c $4,000,000
(Being Bond Matured)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.