On August 1, 2017, Culver Corporation issued $501,600, 9%, 10-year bonds at face

Question

On August 1, 2017, Culver Corporation issued $501,600, 9%, 10-year bonds at face value. Interest is payable annually on August 1. Culver’s year-end is December 31. On August 1, 2017, Culver Corporation issued $501,600, 9%, 10-year bonds at face value. Interest is payable annually on August 1. Culver’s year-end is December 31. Date Account Titles and Explanation Debit Credit Aug. 1 SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS Date Account Titles and Explanation Debit Credit Dec. 31 SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS Date Account Titles and Explanation Debit Credit Aug. 1 SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS

Exercise 10-8

On August 1, 2017, Culver Corporation issued $501,600, 9%, 10-year bonds at face value. Interest is payable annually on August 1. Culver’s year-end is December 31.

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Aug 1 Cash 501600    Bonds payable 501600 (To record issue bonds) Dec 31 Interest expense (501600*9%*5/12) 18810 Interest payable 18810 (To recor interest) Aug 1 Interest payable 18810 Interest expense (18810*7/5) 26334 Cash 45144 (To record interest paid)

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