On January 1, 2013, Innovative Solutions, Inc., issued $200,000 in bonds at face

Question

On January 1, 2013, Innovative Solutions, Inc., issued $200,000 in bonds at face value. The bonds have a stated interest rate of 6 percent. The bonds mature in 10 years and pay interest once per year on December 31. Required 1., 2.&3. Complete the required journal entries to record the bond issuance, interest payment on December 31, 2013, early retirement of the bonds. Assume the bonds were retired immediately after the first interest payment at a quoted price of 101. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) view transaction list Journal Entry Worksheet Record the issuance of bonds of $200,000 at face value. General Journal Debit Credit Date January 01, 2013 Enter debits before credits

Explanation / Answer

Ans-

01/01/2013         Bank A/c Dr.                                                       200000

                                                To 6% Bonds Payable A/c                                             200000

                                (Being 2000 bonds issued at face value of 100$)

31/12/2013         Interest on 6% Bond A/c Dr.                        12000   

                                                To Bank A/c                                                                        12000

                                (Being Interest on 6% Bond Paid)

31/12/2013         6% Bond Payable A/c Dr.                              200000

Loss on redemption of Bond A/c Dr. 2000                      

                                                To Bank A/c                                                                        202000

                                (Being 2000 6% Bonds redeemed at a quoted price of 101$)

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