1 answer

Gareon Conley Company issued $3,000,000 of 10-year, 6% annual interest, bonds payable on March 1, 2018....

Question:

Gareon Conley Company issued $3,000,000 of 10-year, 6% annual interest, bonds payable on March 1, 2018. The bonds are dated J

Gareon Conley Company issued $3,000,000 of 10-year, 6% annual interest, bonds payable on March 1, 2018. The bonds are dated January 1, 2018, with interest payable semi-annually every July 1 and January 1. Conley Company maintains their accounting records on a fiscal year ending July 31. The market rate of interest on similar debt instruments was also 6% so the bonds were sold at face (par) value. The journal entry to record the first interest payment on July 1, 2018, would include a debit to bond interest expense for $90,000 a debit to bond interest payable for $60,000 a credit to cash for $120,000 a debit to bond interest expense for $60,000

Answers

Answer: D) a Debit to Bond Interest Expenses for $60,000

BOnd interest Expenses = 3000,000*6%*4/12 =60,000 (for Four months only )

REcord the Bond interest Expenses

Debit Credit
Bond interest Expenses $60,000
Cash $60,000
.

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