Q6SE_1
Question
Journalizing bond transactions
Power Company issued a $1,000,000, 5%, 5-year bond payable at face value on
January 1, 2018. Interest is paid semiannually on January 1 and July 1.
Requirements
1. Journalize the issuance of the bond payable on January 1, 2018.
2. Journalize the payment of semiannual interest on July 1, 2018.
Step-by-Step Solution
Verified Answer
Answer:
The cash account is debited with $1,000,000, and the 5% bonds payable charge is
credited with $1,000,000.
1Step 1: Definition of journal entry
Journal entry is the recording of the financial information by using the accounting language.
2Step 2: Journal entry of the issue of bond
| Date | Particulars | Debit | Credit |
| January 1, 2018 | Cash | $1,000,000 | |
| 5% Bonds Payable | $1,000,000 | ||
(Being Entry of the issue of bonds) |
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