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.)

Date

Account Titles and Explanation

Debit

Credit

Simon Company:

Garfunkle Company:

1. On January 1, 2014, Simon Company issued $254,400 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, 2014, Garfunkel Company issued $136,800 of 11%, 10-year bonds dated January 1 at par plus accrued interest. Interest is payable semiannually on July 1 and January 1.

Explanation / Answer

Simon company

1/1/14 cash Dr.$254400

To Bonds payable $254400

7/1/14 Accrued interest (254400 * 9% * 1/4 quarter month) Dr.$5724

To cash 5724

Note:- It is assumed that Accured interest entry has been posted in previous month

12/31/14 interest expense Dr.$5724

To Accrued interest $5724

Garfunkel Company

6/1/14 cash Dr.$136800

To Bonds payable $136800

  

7/1/14 Accrued interest (136800 * 11% * 1/12 ) Dr. $1254

To cash $1254

Note:- It is assumed that Accured interest entry has been posted in previous month

12/31/14 interest expense(136800 *11% *6/12) Dr.7524

To Accrued interest $7524

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