Question

On January 1, 2019, Wildhorse Co. issued $379,500, 7%, 5-year bonds at face value. Interest is payable annually on January 1. (a) Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 (b) Prepare the journal entry to record the accrual of interest on December 31, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 (c) Prepare the journal entry to record the payment of interest on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT Question Attempts: 0 of 4 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Answer:

See the explanation for the answer.

Explanation:

(a)

Bonds are issued at face value

date                   Account                          debit                 credit

Jan 1 ,2019       cash                               $379,500  

                        bonds payable                                        $379,500

                        [to record cash received

                        against bonds issued]  

b.

Interest accrued from Jan-Dec = $379,500*7% = $26,565

                                    Account  

Dec 31 ,2019          Interest expense              $26,565  

                              Interest payable on bonds                 $26,565

As interest is accrued it will be expensed

.

However, it is not paid so it will be interest payable

c)  Interest paid

                                                                       Debit               Credit

Jan 1 ,2020  Interest payable on bonds    $26,565  

                       Cash                                                            $26,565