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On April 1, 2019, Alaska Trading Company issued $900,000 of 6%, 10-year bonds. The bonds, which...

On April 1, 2019, Alaska Trading Company issued $900,000 of 6%, 10-year bonds. The bonds, which were issued at 98, pay interest on October 1 and April 1. Use this information to prepare the General Journal entry (without explanation) to record the April 1, 2019 bond issue. If no entry is required then write "No Entry Required."

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Answer #1

Prepare the general journal entry (without explanation) to record the April 1, 2019 bond issue?

Answer: Here the company is issuing $900,000 value bond at 98, that means the company is issuing at discount. The $900,000 value is being issued at $882,000 ($900,000X98%), that means at a discount of $18,000. At this time the following journal entry will be passed:

Date Account Title Debit Credit
April 1, 2019 Cash A/C $ 882,000
Discount on issue of bonds A/C $ 18,000
6%, 10 year bonds A/C $ 900,000
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