interest rate of 7 percent The bonds mature in 10 yoars and

interest rate of 7 percent. The bonds mature in 10 yoars and pey interest once per year on December 31 of 102. (If no entry Is select \"No Journal Date Clear entry

Solution

Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Jan Cash    240,000.00    Bonds Payable    240,000.00 (To record the issue of Bonds) 31-Dec Interest Expense ($240,000 X 7%)      16,800.00    Cash      16,800.00 (To record the interest paid) 31-Dec Bonds Payable    240,000.00 Loss on Bonds Retired ($240,000 X 2%)        4,800.00    Cash ($240,000 X 102%)    244,800.00 (To record the Bonds retired)