600 points On January 1, Innovative Solutions, Inc issued $180,000 in bonds at f

Question

600 points On January 1, Innovative Solutions, Inc issued $180,000 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, earty retrement 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 $180,000 at face value Note: Enter debits before credits Date General Journal DebitCredit January 01

Explanation / Answer

The journal entry for issue of bond:

Cash dr $180000

To Bonds payable $180000

Interest amount = $180000 * 6% = $10800

Journal entry for interest payment:

Interest expense dr $10800

To cash $10800

Journal entry for retirement of bonds:

Bonds payable dr $180000

loss on retirement of bonds dr $1800

To Cash $181800

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