The Windy City Company issued $500,000 of 12% bonds on January 1, 2013. The bonds were sold for $549,493, and they were expected to yield 10% interest compounded semiannually. The interest dates are June 30 and December 31. The maturity date of the bonds is December 31, 2019.
Required:
a.Prepare the journal entry to record the issuance of the bonds.
b.Using the effective interest method, prepare the journal entries to record the first two interest payments.

Question

The Windy City Company issued $500,000 of 12% bonds on January 1, 2013. The bonds were sold for $549,493, and they were expected to yield 10% interest compounded semiannually. The interest dates are June 30 and December 31. The maturity date of the bonds is December 31, 2019.
Required: 
a.Prepare the journal entry to record the issuance of the bonds.
b.Using the effective interest method, prepare the journal entries to record the first two interest payments.

Quizplus · Accepted Answer

The Answer of The Windy City Company issued $500,000 of 12% bonds on January 1, 2013. The bonds were sold for $549,493, and they were expected to yield 10% interest compounded semiannually. The interest dates are June 30 and December 31. The maturity date of the bonds is December 31, 2019.
Required: 
a.Prepare the journal entry to record the issuance of the bonds.
b.Using the effective interest method, prepare the journal entries to record the first two interest payments.

The Windy City Company Issued $500,000 of 12% Bonds on January