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

See the explanation for the answer.

Step-by-step 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