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Bonds Payable

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Bonds Payable
Based on the information below, prepare the journal entries for the following:
(1) Issue of the bonds on January 1st.
(2) Payment of the first semi-annual interest installment with cash.
(3) Accrual of the second interest installment on December 31st to be paid on
January 1st.
Face amount of bonds
$500,000
Term of bonds in years
10
Contract interest rate of bonds
10%
Semi-annual rate
5%
Interest payment dates are July 1 and January 1.

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Based on the information below, prepare the journal entries for the following:
(1) Issue of the bonds on January 1st.
(2) Payment of the first semi-annual interest installment with cash.
(3) Accrual of the second interest installment on December 31st to be ...

Solution Summary

The solution explains the journal entries relating to bond issuance, interest payment and accrual of interest.

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