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Important information about Bond entries

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Boone Company issued $240,000 of 8%, 20-year bonds on January 1, 2007, at face value. Interest is payable annually on January 1.

Prepare the journal entries to record the following events.
(a) The issuance of the bonds
(b) The accrual of interest on December 31, 2007.
(c) The payment of interest on January 1, 2008.
(d) The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

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Solution Preview

(a) The issuance of the bonds

The bonds are issued at face value so cash received is $240,000. The journal entry is
Cash Dr 240,000
Bonds Payable Dr 240,000

(b) The accrual of interest on ...

Solution Summary

The solution explains the journal entries relating to bonds

$2.19