Answer:
Dr cash $226,000
Cr Bonds payable $226,000
31st December year 1
Dr cash $74,000
Cr Lease revenue $74,000
Dr interest expense $11,300
Cr Cash $11,300
31st December year 2
Dr cash $74,000
Cr Lease revenue $74,000
Dr interest expense $11,300
Cr Cash $11,300
Explanation:
Upon the receipt of $226,000 from bond issue,cash acount would be debited with $226,000 and bonds payable account would be credited with the same amount.
When land purchased,the land account is debited with $226,000 and cash is credited with $226,000.
The receipt of $74,000 from lease rental means that cash is debited and the lease revenue is credited.
The coupon interest on the bonds=$226,000*5%=$11,300
The coupon interest is debited to interest expense and credited to cash in each of the two years.
find attached t accounts.
