The board of directors of Media Plus authorizes the issue of $9,000,000 of 10%,

Question

The board of directors of Media Plus authorizes the issue of $9,000,000 of 10%, 25-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 transactions: 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 Media Plus balance sheet at December 31, 2016. 2. 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

Explanation / Answer

May-31 Cash 9000000      Bonds payable 9000000 Nov-30 Interest expense 450000        Cash 450000 Dec-31 Interest expense 75000         Interest payable 75000 May-31 Interest expense 375000 Interest payable 75000        Cash 450000 2 Partial Balance Sheet Current liabilities Interest payable 75000 Long-term liabilities Bonds payable 9000000

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