10. Iso points On January 1, Innovative Solutions, Inc. issued $150,000 in bonds
ID: 2570705 • Letter: 1
Question
10. Iso points On January 1, Innovative Solutions, Inc. issued $150,000 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 payment at a quoted price of 101. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the issuance of bonds of $150,000 at face value. Note: Enter debits before credits. Date General Journal Debit Credit January 01 Record entry Clear entry View general journal Hints Reterences eBook &Resources; int #1Explanation / Answer
Entry Date General journal Debit Credit 1 Jan.1 Cash 150,000.00 Bonds payable 150,000.00 2 Dec.31 Interest expense 9,000.00 Cash 9,000.00 [ Interest= 150000*6%=9000] 3 Dec.31 Bonds payable 150,000.00 Loss on extinguishment of debt 1,500.00 Cash 151,500.00 [Loss on retirement = 150000*(101-100)/100 means 1% extra over face value]
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