Question

The board of directors of Laptops. Laptops Plus authorizes the issue of $9,000,000 of 8?%, 20?-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May? 31, 2016,at par.

Requirements

1.	Journalize the following? transactions:
	a. Issuance of half of the bonds on May? 31, 2016
	b. Payment of interest on November? 30, 2016
	c. Accrual of interest on December? 31, 2016
	d. Payment of interest on May? 31, 2017
2.	Report interest payable and bonds payable as they would appear on the Laptops .Plus balance sheet at December? 31, 2016 Journalize the transactions a-d Record debits first then credits. Exclude explanations from journal entries.

Answer 1

1.a. Issue of half of the bonds on May 31, 2016
Date	Account Title	Debit	Credit
May 31, 2016	Cash	4500000
	Bonds Payable		4500000
1.b. Payment of interest on Nov.30, 2016
Date	Account Title	Debit	Credit
Nov.30, 2016	Interest Expense	180000
	Cash		180000
1.c. Accrual of interest on December 31, 2016
Date	Account Title	Debit	Credit
Dec.31, 2016	Interest Expense	30000
	Interest Payable		30000
1.d. Payment of interest on May 31, 2017
Date	Account Title	Debit	Credit
May.31, 2017	Interest Expense	150000
	Interest Payable	30000
	Cash		180000

2.

LAPTOP PLUS
Balance Sheet (Partial)
Liabilities
Current Liabilities
Interest Payable	30000
Long-term liabilities
Bonds Payable	4500000