Q9SE_3 - Horngren'S Financial And Managerial Accounting

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

Answer

Answer:

The bonds payable account is debited with $100,000, and the cash account is

credited with $100,000.

Step 1: Definition of bond maturity

The date at which the bonds become due or date at which company have to made

payment according to bond agreement is known as the maturity of the bonds.

Step 2: Entry for the issue of bond

Date	Particulars	Debit	Credit
January 1, 2028	7.5% Bonds Payable	$100,000
	Cash		$100,000
	(Being Entry for the retirement of bonds)