Brief Exercise 10-10 Flounder Corp. issued 1,500 9%, 9-year, $1,000 bonds dated

Question

Brief Exercise 10-10

Flounder Corp. issued 1,500 9%, 9-year, $1,000 bonds dated January 1, 2017, at face value. Interest is paid each January 1.

(a) Prepare the journal entry to record the sale of these bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

(b) Prepare the adjusting journal entry on December 31, 2017, to record interest expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

(c) Prepare the journal entry on January 1, 2018, to record interest paid. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Date

Account Titles and Explanation

Debit

Credit

Explanation / Answer

a Cash 1500000      Bonds payable 1500000 b Interest expense 135000      Interest payable 135000 c Interest payable 135000         Cash 135000

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