Finacial Accounting The board of directors of Cellphones Plus authorizes the iss

Question

Finacial Accounting

The board of directors of Cellphones Plus authorizes the issue of $6,000,000 of 9%, 5-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May 31, 2016, at par, Requirements 1. Journalize the following transaction:s a. Issuance of half of the bonds on May 31, 2016 b. Payment of interest on November 30, 2016 c. Accrual of interest on December 31, 2016 d. Payment of interest on May 31, 2017 Report interest payable and bonds payable as they would appear on the Cellphones Plus balance sheet at December 31, 2. 2016 Requirement 1. Journalize the transactions a through d. (Record debits first, then credits. Exclude explanations from journal entries.) a. Issuance of half of the bonds on May 31, 2016 Journal Entry Date 2016 Accounts Debit Credit May 31 b. Payment of interest on November 30, 2016 Journal Entry Date 2016 Accounts Debit Credit Nov 30

Explanation / Answer

Requirement 1 :

In the books of Cellphones Plus:

Requirement 2:

Cellphones Plus

Balance Sheet ( Partial)

December 31, 2016

Date Accounts Debit Credit $ $ a. May 31, 2016 Cash ( $ 6,000,000 x 1/2) 3,000,000 Bonds Payable 3,000,000 b. November 30, 2016 Interest Expense ( $ 3,000,000 x 9% x 1/2) 135,000 Cash 135,000 c. December 31, 2016 Interest Expense ( $ 135,000 / 6) 22,500 Interest Payable 22,500 d. May 31, 2017 Interest Expense 112,500 Interest Payable 22,500 Cash 135,000

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