Q9SE_1
Question
Journalizing bond transactions including retirement at maturity
McQueen Company issued a $100,000, 7.5%, 10-year bond payable. Journalize
the following
transactions for McQueen Company, and include an explanation for each
entry:
a. Issuance of the bond payable at face value on January 1, 2018.
b. Payment of semiannual cash interest on July 1, 2018.
c. Payment of the bond payable at maturity, assuming the last interest
payment had
already been recorded. (Give the date.)
Step-by-Step Solution
Verified Answer
Answer:
The cash account is debited with $100,000 and the 7.5% bonds payable account is
credited with $100,000.
1Step 1: Definition of bond maturity
The date at which the bonds become due is known as the maturity of the bonds.
2Step 2: Entry for the issue of bond
| Date | Particulars | Debit | Credit |
| January 1, 2018 | Cash | $100,000 | |
| 7.5% Bonds Payable | $100,000 | ||
(Being Entry of the issue of bonds) |
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