Question

41) On January 1, 20X3, Middleton Industries issued $5 million of 5-year, 9% debentures at par which are dated as of January 1, 20X3.

Prepare the journal entries to record the

(a) issuance of the bonds.

(b) the first semi-annual interest payment.

(c) the payment of maturity value.

42) Callton, Inc., had a 6-year, 8%, $375,000 bonds ready to be sold on January 1, 20X3. The bonds will pay interest every June 30 and December 31. However, due to market conditions, the company did not sell the bonds until March 1, 20X3, at which time the bonds was issued at par.

Given the information presented above, prepare the appropriate journal entry for Callton, Inc., for each of the following dates:

a. January 1, 20X3

b. March 1, 20X3

c. June 30, 20X3

d. December 31, 20X3

Answer 1

Question - (41)

Answer -

Step - (1) - Iformation Given -

On January 1, 20X3, Middleton Industries issued $5 million of 5-year, 9% debentures at par.

.

Step - (2) - Journal entries in the boooks of Middleton Industries -

	Date	General Journal	Debit ($)	Credit ($)
(a)	January 1, 20X3	Cash Bonds Payable (Bonds issued at par)	5000000 -	- 5000000
(b)	July 1, 20X3	Interest Expense [($5000000 * 9%) * 6/12] Cash (Semiannually interest payable recorded)	225000 -	- 225000
(c)	January 1, 20X8	Bonds Payable Cash (Payment of maturity value of bonds on retirement)	5000000 -	- 5000000