QUESTION 4 Describe the journal entries required to record t

QUESTION 4

Describe the journal entries required to record the issuance of bonds at par and the payment of bond interest.

Solution

Explanation for Issuance of Bonds: By issuing the Bonds we received the cash and we create the laibility for payment of interest against these bonds.

When we recived the cash then we debit the cash so Cash will be debited and there is liability to repay the value of bonds so we create the same by crediting the bonds.

Explanation for Interest Expenses: Interest Expenses is the interest amount which are payable on amount received against the bonds. Expenses should be debite so interest is debited and cash goes out so cash will be credited.