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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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Capricious23

Answer:

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

abiolataiwo2015

The appropriate journal entry to  record the bond issue on January 1, 2021, and the first two interest payments on December 31, 2021, and December 31, 2022 are:

White Water Journal entries

Jan 1, 2021

Debit Cash $450,000  

Credit Bonds payable $450,000

(To record bond issue)  

Dec 31, 2021

Debit Interest expense $27,000

($450,000×6%)  

Credit Cash  $27,000

(To record interest)  

Dec 31,2022

Debit Interest expense $27,000

($450,000×6%)  

Credit Cash  $27,000

(To record interest)

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