Question

Riverbed Corp issued 2,300 6%, 5-year, $1,000 bonds dated January 1, 2022, at face value. Interest is paid each January 1. Prepare a tabular summary to: (a) Record the sale of these bonds on January 1, 2022. (b) Adjust accounts on December 31, 2022, to record interest expense. (c) Record interest paid on January 1, 2023.

Answer 1

Answer: See explanation

Explanation:

The journal entry to record the transactions goes thus:

a. Jan 1, 2022:

Debit Cash 2300 × 1000 = 2300000

Credit Bonds payable 2300000

(To record sale of bonds)

b. Dec. 31, 2022

Debit Interest expense 2300000× 6% = 138000

Credit Interest payable 138000

c. Jan 1, 2023

Debit Interest payable 138000

Credit Cash 138000

(To record interest paid)