Question

Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson issued $800,000 of 10-year, 6% bonds on May 1 of the current year at face value, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year.
May 1. Issued the bonds for cash at their face amount.
Nov. 1. Paid the interest on the bonds.
Dec. 31. Recorded accrued interest for two months.
Journalize the entries to record the above selected transactions for the current year. If an amount box does not require an entry, leave it blank.
May 1
Nov. 1
Dec. 31

Answer 1

Answer:

May 1

Dr Cash 800,000

Cr Bonds payable 870,000

Nov 1

Dr Interest expense 24,000

Cr Cash 24,000

Dec 31

Dr Interest expense 8,000

Cr Interest payable 8,000

Explanation:

Thomson Co Journal entries

May 1

Dr Cash 800,000

Cr Bonds payable 870,000

Nov 1

Dr Interest expense 24,000

Cr Cash 24,000

(800,000*6%*6/12)

Dec 31

Dr Interest expense 8,000

Cr Interest payable 8,000

(800,000*6%*2/12)