Question

Monty Corp. issued 1,900 5%, 9-year, $1,000 bonds dated January 1, 2017, at face value. Interest is paid each January 1. (a) Prepare the journal entry to record the sale of these bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2017 enter an account title for the journal entry on January 1,2017 enter a debit amount enter a credit amount enter an account title for the journal entry on January 1,2017 enter a debit amount enter a credit amount

Answer 1

Date Account Title Explanation Debit Credit

January 1,2017 Cash Received cash 1,900,000

for bond issued

Bond payable Issued bonds for 1,900,000

cash

Step-by-step explanation:

1)The corporation issues 1,900 bonds that have a face value of 1,000 and issues them as face value so the the cash that they get from the issuance of the bonds is equal to the number of bonds multiplied by the face value of each bond and the same amount is also the bonds payable that they have to pay back in the future.

1,900*1000=1,900,000

So Monty Corp will debit 1,900,000 cash as it is receiving 1,900,000 cash for the bond issuance and will credit bonds payable by 1,900,000 as it has to pay back this amount at a later date.

This is the only entry related to the bond which will be made on January 1 as the interest will be paid next January and it will be recorded then.