Laudie Company issued $371,000 of 8%, 10-year bonds on January 1, 2014, at face

Question

Laudie Company issued $371,000 of 8%, 10-year bonds on January 1, 2014, at face value. Interest is payable semiannually on July 1 and January 1. Prepare the journal entry to record the issuance of the bonds. Prepare the journal entry to record the payment of interest on July 1, assuming no previous accrual of interest. Prepare the journal entry to record the accrual of interest on December 31. Prepare the journal entry to record the redemption of bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Explanation / Answer

Date Account Debit Credit 1-1-2014 Bank $371000 8% bond $371000 1-7-2014 Bond interest 14840 Bank 14840 31-12-2014 Bond interest 14840 interest payable 14840 1-1-2024 8% bond 371000 Bank 371000

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