Puppa Company issued a S500 000 6 5year bond payable at face

Puppa Company issued a S500 000, 6% 5-year bond payable at face value on January 1, 2018 Interest is paid sem annualy on January 1 and July 1 Requirements 1. Journalize the issuance of the bond payable on January 1,2018. 2. Journalize the payment of semiannual interest on July 1,2018 Requirement 1. Journalize the issuance of the bond payable on January 1, 2018. (Record debits first, then credits. Select explanations on the last line c Date 2018 Jan. 1 Accounts and Explanation Debit Credit

Solution

Prepare the journal entries for given events:

While journalising the entry for issuance of bonds payable, cash should be debited as cash received and bonds payable should be credited as it is a liability to the company.

While journalising the entry for semiannual interest payment, cash should be credited as cash goes out and interest on bonds payable should be debited as it is an expense to the company.