Question

EA9. LO 13.3 On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The bonds had a stated rate of 6% and paid interest semi-annually. What is the journal entry to record the first payment to the bondholders? EA10. LO 13.3 Pinetop Corporation issued $150,000 10-year bonds at par. The bonds have a stated rate of 6% and pay interest annually. What is the journal entry to record the sale of the bonds? EA11. LO 13.3 Medhurst Corporation issued $90,000 in bonds for $87,000. The bonds had a stated rate of 8% and pay interest quarterly. What is the journal entry to record the first interest payment?

Answer 1

Interest A/c Dr To Bank Account (Being Semi annually Interest Paid) $3,000.00 $3,000.00 Calculation of Interest Face value * Rate of interest * Time Adjustment $1,00,000 * 6%*6/12 $3,000.00 EA10 Bank A/c Dr To 6% Bond A/C (Being 6% Bonds Issued for cash) $1,50,000.00 $1,50,000.00 EA11 Interest A/c Dr To Bank Account (Being Quarterly Interest Paid) $1,800.00 $1,800.00 Calculation of Interest Face value * Rate of interest * Time Adjustment $90,000 * 8%* 3/12 $1,800.00