Question

Brussels Enterprises Issues bonds at par dated January 1, 2021, that have a $3,400,000 par value, mature in four years, and pay 6% interest semiannually on June 30 and December 31.1. Record the entry for the issuance of bonds for cash on January 1.2. Record the entry for the first semiannual interest payment and the second semiannual interest payment.3. Record the entry for the maturity of the bonds on December 31, 2024 (assume semiannual interest is already recorded).

Answer 1

The answer provides journal entries for the issuance, interest payments, and maturity of the bonds.

Step-by-step explanation:

1. To record the entry for the issuance of bonds for cash on January 1, we need to debit the Cash account for the amount received (in this case, $3,400,000) and credit the Bonds Payable account for the same amount.

2. To record the entry for the first semiannual interest payment, we need to debit the Interest Expense account for half of the annual interest payment (in this case, $102,000) and credit the Cash account for the same amount. Similarly, for the second semiannual interest payment, we need to debit the Interest Expense account for $102,000 and credit the Cash account for the same amount.

3. To record the entry for the maturity of the bonds on December 31, 2024, we need to debit the Bonds Payable account for the remaining balance (in this case, $3,400,000) and credit the Cash account for the same amount.