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Pizza Pier issues 9%. 9-year bonds with a face amount of $70,000 on January 1, 2015. The market...

Question:

Pizza Pier issues 9%. 9-year bonds with a face amount of $70,000 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is also 9%. Interest is paid semiannually on June 30 and December 31.

1. Record the bond issue. (Omit the "$" sign in your response

Date General Journal Debit Credit
Jan. 1, 2015
 

2. Record the first interest payment on June 30, 2015. (Do not round intermediate calculations. Omit the "$" sign in your response

Date General Journal Debit Credit
Jun. 30, 2015
 

Bond Issue Calculations:

When bonds are issued, the issuer incurs a long term liability to pay an amount at maturity and interest payments during the period of the issue.

Accounting entries must be made to record the issuance of the bonds and to record the interest payments and accrued interest at balance date.

Answer and Explanation:

(a). The following journal is made to record the issuance of bonds:

DrCash70,0000
CrBonds Payable70,000
To record the issue of bonds

This journal...

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Bonds: Types, Characteristics and Issuing Procedures

from Accounting 101: Financial Accounting

Chapter 10 / Lesson 7
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