Question

eBook 3 Show Me How Calculator Print Item Entries for Issuing Bonds Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson Co.Issued $990,000 of 25-year, 10% bonds on May 1 of the current year at face value, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year. May 1 Issued the bonds for cash at their face amount. Nov. 1 Paid the interest on the bonds. Dec. 31 Recorded accrued interest for two months. Journalize the entries to record the above selected transactions for the current year. Round your answers to whole number. May 1 Cash 990,000 Bonds Payable 990,000 Nov. 1 Dec 31 -

Answer 1

--Journal entries

Date	Accounts title	Debit	Credit
May-01	Cash	$990,000
	Bonds Payable		$990,000
	(to record issuance)
Nov-01	Interest expense ($990000 x 10% x 6 months/12)	$49,500
	Cash		$49,500
	(to record payment of 6 month interest)
Dec-31	Interest Expense ($990000 x 10% x 2/12)	$16,500
	Interest payable		$16,500
	(to record accrual of 2 month's interest)