Presented below are two independent situations. 1. On January 1, 2017, Pharoah C

Question

Presented below are two independent situations. 1. On January 1, 2017, Pharoah Company issued $216,000 of 8%, 10-year bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1. 2. On June 1, 2017, Novak Company issued $168,000 of 12%, 10-year bonds dated January 1 at par plus accrued interest. Interest is payable semiannually on July 1 and January 1. For each of these two independent situations, prepare journal entries to record the following. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) enterea. be net (a) The issuance of the bonds. (b) The payment of interest on July 1. (c) The accrual of interest on December 31. Date Account Titles and Explanation Debit Credit

Explanation / Answer

Date Particulars Debit($) Credit($)

Pharoah company

a. Cash $216000

To bonds payable $216000

b. Interest expense $4320*

To cash $4320

c. Interest expense $4320

To interest payable $4320

* $216000 * 8% * 3/12 = $4320.

Novak company

a. Cash $176400

To bonds payable $168000

To interest expense $8400

b. Interest expense $10080

To cash $10080

$168000 * 12%*6/12 = $10080

c, Interest expense $10080

To interest payable $10080.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.