On August 1, 2017, Pronghorn Corp issued $494,400, 8%, 10-year bonds at face val

Question

On August 1, 2017, Pronghorn Corp issued $494,400, 8%, 10-year bonds at face value. Interest is payable annually on August 1. Pronghorn’s year-end is December 31.

Date

Account Titles and Explanation

Debit

Credit

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Date

Account Titles and Explanation

Debit

Credit

SHOW LIST OF ACCOUNTS

LINK TO TEXT

Date

Account Titles and Explanation

Debit

Credit

On August 1, 2017, Pronghorn Corp issued $494,400, 8%, 10-year bonds at face value. Interest is payable annually on August 1. Pronghorn’s year-end is December 31.

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Aug 1,2017 Cash 494400     Bonds payable 494400 (To record issue bonds payable) Dec 31,2017 Interest expense (494400*8%*5/12) 16480     Interest payable 16480 (To record accured interest) Aug 1,2018 Interest payable 16480 Interest expense (494400*8%*7/12) 23072      Cash 39552 (To record interest paid)

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