Brief Exercise 10-10 Marigold Corp. issued 1,700 7%, 9-year, $1,000 bonds dated

Question

Brief Exercise 10-10 Marigold Corp. issued 1,700 7%, 9-year, $1,000 bonds dated January 1, 2017, at face value. Interest is paid each January 1. (a) Prepare the journal entry to record the sale of these bonds on January 1, 2017. (Credit account titles are automatically Do not indent manually.) Date Account Titles and Explanation e loit Credit Jan. 1, 2017 (b) Prepare the adjusting journal entry on December 31, 2017, to record interest expense. (Credit account titles are automa entered. Do not indent manually.) Date Dec. 31, 2017 Account Titles and Explanation Debit Credit (c) Prepare the journal entry on January 1, 2018, to record interest paid. (Credit account titles are automatically indented indent manually.) Account Titles and Explanation Debit Credit Jan. 1, 2018

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Jan 1,2017 Cash 1700000 Bonds payable 1700000 (To record issue bonds payable) Dec 31,2017 Interest expense 119000 Interest payable 119000 (To record accured interest) Jan 1,2018 Interest payable 119000 Cash 119000 (To record interest paid)

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