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22 May, 21:43

On January 1, 2021, White Water issues $450,000 of 6% bonds, due in 20 years, with interest payable annually on December 31 each year. Required: Assuming the market interest rate on the issue date is 6%, the bonds will issue at $450,000. Record the bond issue on January 1, 2021, and the first two interest payments on December 31, 2021, and December 31, 2022. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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  1. 22 May, 23:05
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    The journal entries are as follows.

    Explanation:

    1st January 2021

    Debit: Cash $450,000

    Credit: Bonds payable $450,000

    (To record bond issued at par)

    31st December 2021

    Debit: Interest expense ($450,000 * 6%) $27,000

    Credit: Cash $27,000

    (To record interest expense Paid)

    31st December 2022

    Debit: Interest Expense [450000*6%] $27,000

    Credit: Cash $27,000
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