Question

Brussels Enterprises issues bonds at par dated January 1, 2019, that have a $2,200,000 par value, mature in four years, and pay 9% interest semiannually on June 30 and December 31. 1. Record the entry for the issuance of bonds for cash on January 1. 2. Record the entry for the first semiannual interest payment and the second semiannual interest payment. 3. Record the entry for the maturity of the bonds on December 31, 2022 (assume semiannual interest is already recorded).

Answer 1

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1. January 1, 2019

Cash Debit. $2,200,000

9% Bonds Payable Credit. $2,200,000

(To record the issue of bonds)

2. June 30, 2019

Interest expense. Debit $99,000

Cash. Credit. $99,000

(To record the interest expense)

3. December 31, 2019

Interest expense. Debit $99,000

Cash. Credit. $99,000

(To record the interest expense)

4. December 31, 2022

9 % Bonds Payable. Debit. $2,200,000

Cash. Credit. $2,200,000

(To record the maturity of bonds)