Question

Larkspur, Inc. issued 2,300, 8%, 5-year, $1,000 bonds dated January 1, 2019, at 100. Interest is paid each January 1. Prepare the journal entry to record the sale of these bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 LINK TO TEXT Prepare the adjusting journal entry on December 31, 2019, to record interest expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 LINK TO TEXT Prepare the journal entry on January 1, 2020, to record interest paid. (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

Answer 1

bonds issued $2,300,000

coupon rate 8%

5 year to maturity

sold at face value

1. Prepare the journal entry to record the sale of these bonds on January 1, 2019.

January 1, 2019, 5 year bonds issued at face value

Dr Cash 2,300,000

Cr Bonds payable 2,300,000

2. Prepare the adjusting journal entry on December 31, 2019, to record interest expense.

December 31, 2019, accrued interests on bonds payable

Dr Interest expense 184,000

Cr Interest payable - bonds payable 184,000

3. Prepare the journal entry on January 1, 2020, to record interest paid.

January 1, 2020, payment of interest on bonds payable

Dr Interest payable - bonds payable 184,000

Cr Cash 184,000