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Drake Co Vince Co issue bonds, pay interest, accrue interest

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Presented are two independent situation.

1. On Jan 1,2012 Drake Company issued 300,000 of 9% 10-year bonds at par. Interest is payable quarterly on Apr1,Jul 1,Oct 1, and Jan1.
2. On Jun 1,2012 Vince Company issued 200,000 of 12% 10-year bonds dated Jan 1 at par.plus accured interest. Interest is payable semiannually on July 1 and Jan 1.

INSTRUCTION
For each of these two independent situation,prepare journal entries to record the following.
(a) The issuance of the bonds.
(b) The payment of interest on Jul 1.
(c) The accrual of interest on Dec 31.

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Carol Sargent, PhD
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  • MSc, University of Virginia
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