ezto.mheducation.com 2.14 points E10-8 Preparing Journal Entries to Record Issua

Question

ezto.mheducation.com 2.14 points E10-8 Preparing Journal Entries to Record Issuance of Bonds at Face Value, Payment of Intere On January 1, Innovative Solutions, Inc, issued $120,000 in bonds at face value. The bonds have a stated interest rate of 6 percent. The bonds mature in 10 years and pay interest once per year on December 31. Required: 1,2&3. Complete the required journal entries to record the bond issuance, interest payment on December 31, early retirement of the bonds. Assume the bonds were retired immediately after the first interest paryment at a quoted price of 101. (If no entry is required for a transactionievent, select "No Journal Entry Required in the first account field.) View transaction list 1 Record the issuance of bonds of $120,000 at face value. 2 Record the interest payment on December 31. 3 Record the retirement of the bonds at a quoted price of 101. Note:- journal entry has been entered Record entry Clear entry View general journal 2 3 4 5

Explanation / Answer

E10-8

E10-9

Date General Journal Debit Credit Jan. 1 Cash 120000 Bonds payable 120000 (To record issuance of bonds) Dec. 31 Interest expense 7200 Cash ($120000 x 6%) 7200 (To record interest payment) Dec. 31 Bonds payable 120000 Loss on retirement of bonds 1200 Cash ($120000 x 101/100) 121200 (To record retirement of bonds)

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