Romine Company issued $539,600 of 9%, 10-year bonds on January 1, 2014, at face

Question

Romine Company issued $539,600 of 9%, 10-year bonds on January 1, 2014, at face value. Interest is payable annually on January 1.

Prepare the journal entries to record the issuance of the bonds

Prepare the journal entries to record the accrual of interest on December 31, 2014

Prepare the journal entries to record the payment of interest on January 1, 2015

Prepare the journal entries to record the redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Explanation / Answer

Date Account Title Debit Credit January 1, 2014 Cash 539,600 9% Bonds Payable 539,600 December 31 2014 Interest expense 48,564 Interest payable 48,564 January 1, 2015 Interest payable 48,564 Cash 48,564 At maturity of the bonds 9% Bonds Payable 539,600 Cash 539,600

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