On February 1, 2013, Sanford & Son issued 10% bonds dated February 1, 2013, with a face amount of $200,000. The bonds sold for $239,588 and mature in 20 years. The effective interest rate for these bonds was 8%. Interest is paid semiannually on July 31 and January 31. Sanford & Son's fiscal year is the calendar year.
Required:
1. Prepare the journal entry to record the bond issuance on February 1, 2013.
2. Prepare the entry to record interest on July 31, 2013, using the straight-line method.
3. Prepare the necessary journal entry on December 31, 2013.
4. Prepare the necessary journal entry on January 31, 2014.

Question

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The Answer of On February 1, 2013, Sanford & Son issued 10% bonds dated February 1, 2013, with a face amount of $200,000. The bonds sold for $239,588 and mature in 20 years. The effective interest rate for these bonds was 8%. Interest is paid semiannually on July 31 and January 31. Sanford & Son's fiscal year is the calendar year.
Required:
1. Prepare the journal entry to record the bond issuance on February 1, 2013.
2. Prepare the entry to record interest on July 31, 2013, using the straight-line method.
3. Prepare the necessary journal entry on December 31, 2013.
4. Prepare the necessary journal entry on January 31, 2014.

On February 1, 2013, Sanford & Son Issued 10% Bonds