On May 1, 2014, Herron Corp. issued $314,400, 11%, 5-year bonds at face value. T
ID: 2498424 • Letter: O
Question
On May 1, 2014, Herron Corp. issued $314,400, 11%, 5-year bonds at face value. The bonds were dated May 1, 2014, and pay interest semiannually on May 1 and November 1. Financial statements are prepared annually on December 31.
Date
Account Titles and Explanation
Debit
Credit
May 1, 2014
Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2014
Herron Corp.
Balance Sheet
December 31, 2014
Date
Account Titles and Explanation
Debit
Credit
May 1, 2015
Date
Account Titles and Explanation
Debit
Credit
Nov. 1, 2015
Date
Account Titles and Explanation
Debit
Credit
Nov. 1, 2015
On May 1, 2014, Herron Corp. issued $314,400, 11%, 5-year bonds at face value. The bonds were dated May 1, 2014, and pay interest semiannually on May 1 and November 1. Financial statements are prepared annually on December 31.
Explanation / Answer
Journal Entry Date Accounts Debit $ Credit $ 01-May-14 Cash 314,400 11% Bonds Payable 314,400 (Issuance of the bonds) 31-Dec-14 Bonds Interest Expense (314400*11%*2/12) 5,764 Bonds Interest Payable 5,764 (entry for accrued of interest) 01-May-15 Bonds Interest Expense (314400*11%*4/12) 11,528 bonds Interest Payable 5,764 Cash 17,292 (Payment of Interest) 01-Nov-15 Bonds Interest Expense (314400*11%*6/12) 17,292 Cash 17,292 (Payment of Interest) 01-Nov-15 11% Bonds Payable 314,400 Loss on Bonds Redemption 9,432 Cash (314400*103%) 323,832 (entry for call of bonds) Balance Sheet as on Deccember 31, 2014 Long term liabilities 11% Bonds Payable 314400 Short term liabilities bonds Interest Payable 5764
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.