The board of directors of the Lawrence Corporation authortzed the issuance of $6

Question

The board of directors of the Lawrence Corporation authortzed the issuance of $600,000 face value of 10 year, 9 percent bonds dated May 1, 2019,and maturing on May 1, 2029 Interest is payable semiannually on May 1 and November 1. 2019 May 1 Issued $60,e00 of bonds at face value. Nov 1 Paid the semiannual interest on the bonds issued. Dec. 31 Recorded the adjusting entry for the accrued bond interest. 31 Closed the Bond Interest Expense account into the Income Sumary account. 2820 Jan. 1 Reversed the adjusting entry for accrued bond interest. May 1 Paid the semiannual interest on the bonds issued. 1 Issued $50,800 of bonds at face value. 1 Paid the semiannual interest on the bonds issued. Nov. 31 Recorded the adjusting entry for the accrued bond interest. 31 Closed the Bond Interest Expense account into the Income Summary account. Dec. Record the above transactions in a general journal. Journal entry worksheet Issued $60,000 of bonds at face value.

Explanation / Answer

Journal entries: Date Accounts title and explanation Debit $ Credit$ 1-May Cash account Dr. 60000     Bonds payable account 60000 1-Nov Interest expense Account Dr. 2700       Cash account 2700 31-Dec Interest expense Account Dr. 450     Interest payable Account (60000*9%*1/12) 450 31-Dec Income Summary Dr. 3150       Interest expense Account 3150 1-Jan Interest payable Dr. 450    Interest expense Account 450 1-May Interest expense Account Dr. 2700     Cash account 2700 1-May Cash account Dr. 50000      Bonds payable Account 50000 1-Nov Interest expense Account Dr. 4950       Cash account (110000*9%*6/12) 4950 31-Dec Interest expense Account Dr. 825     Interest payable Account (110000*9%*1/12) 825 31-Dec Income Summary Dr. 8025       Interest expense Account 8025

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