Sunday, 17 July 2016

Grenier Limited issued $300,000 of 10% bonds on January

Grenier Limited issued $300,000 of 10% bonds on January 1, 2011. The bonds are due on January 1, 2016, with interest payable each July 1 and January 1. The bonds are issued at face value. Prepare the company’s journal entries for
(a) The January issuance,
(b) The July 1, 2011 interest payment, and
(c) The December 31, 2011 adjusting entry.



(a)
Cash  ...............................................................................................
300,000


            Bonds Payable...................................................................

300,000




(b)
Interest Expense.............................................................................
15,000


            Cash ($300,000 X 10% X 6/12)........................................

15,000




(c)
Interest Expense.............................................................................
15,000


            Interest Payable..................................................................

15,000