Question

5. Assume that a city issues a $1,200,000 bond at par. The city, subsequently, pays $72,000...

5. Assume that a city issues a $1,200,000 bond at par. The city, subsequently, pays $72,000 in interest on the bond and $1,200,000 of the principal.

Required: Prepare the journal entries to record the issuance of the bond and the subsequent payments.

Business   Accounting   
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Answer #1

PARTICULARS

DEBIT

CREDIT

Issuing

Cash/Bank

$1200000

            Bonds Payable

$1200000

Interest Paid

Interest Expense

$72000

            Cash/Bank

$72000

Maturity

Bonds Payable

$1200000

            Cash/Bank

$1200000

Please don’t hesitate to get back if further clarification is needed.

Happy Learning!

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