Question 11 On January 1 2016 Focus Corporation issued 50000

Question 11 On January 1, 2016 Focus Corporation issued $500,000, 6%, 5-year bonds at face value. Interest is payable annually on January 1. Prepare journal entries to record the (Credit account titles are automatically indented when the amount is entered. Do not indent a (a) Issuance of the bonds. (b) Accrual of interest on December 31. (c) Payment of interest on January 1, 2017 Account Titles and Explanation Debit Credit

Solution

Focus Corporation Journal Entry for 2016 Date Particular Amount Debit Amount Cr 01-Jan Cash A/c 500000       To Bonds Payable 500000 (Being amount of Bonds issued at face value) 31-Dec Interest Expense($500000*6%) $                               30,000.00     To Interest Payable 30000 (Being amount of Interst due) Journal Entry for 2017 Date Particular Amount Debit Amount Cr 01-Jan Interest Payable $                               30,000.00       To Cash $     30,000.00 (Being amount of Interest Paid) Randle Inc. Journal Entry for 2017 Date Particular Amount Debit Amount Cr 1st March Cash A/c($380000*97/100) $                           3,68,600.00 Discount on Bonds Payable $                               11,400.00       To Bonds Payable $ 3,80,000.00 (Being amount of Bonds issued at discount) Price Company Journal Entry for 2017 Date Particular Amount Debit Amount Cr $ 43,252.00 Cash A/c($340000*104/100) $                           3,53,600.00      To Bonds Payable $ 3,40,000.00       To Premium on Bonds Payable $     13,600.00 (Being amount of Bonds issued at Premium)