Answer:
A. Jan 1
Dr cash $800,000
Cr Bonds payable $800,000
B. Dr Interest expense $72,000
Cr Interest Payable $72,000
Step-by-step explanation:
Preparation of the entries to record the issuance of the bonds and the first annual interest accrual on December 31
A. Preparation of the entries to record the issuance of the bonds
Jan 1
Dr cash $800,000
Cr Bonds payable $800,000
(Being to record issuance of the bonds)
B. Preparation of the Journal entry to record first annual interest accrual on December 31
Dec 31
Dr Interest expense $72,000
Cr Interest Payable $72,000
($800,000*9%)
(Being to record the first year interest expense accrued)
