On the first day of the fiscal year, a company issues an $1,350,000, 11%, five-y

Question

On the first day of the fiscal year, a company issues an $1,350,000, 11%, five-year bond that pays semiannual interest of $74,250 ($1,350,000 x 11% x ½), receiving cash of $1,512,610.

Journalize the bond issuance on January 1. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTSGeneral Ledger

ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 191 Land 194 Office Equipment 195 Accumulated Depreciation-Office Equipment

Explanation / Answer

1-Jan Cash 110 1512610 Premium on bonds payable 253 162610 Bonds payable 251 1350000 (To record issue of bonds)

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