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Harrison Harrison
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6 years ago
On January 1, 2013, JetNew Corp. issued $300,000 of 8%, 5-year bonds, with annual interest payments on January 1. The bonds were issued at face value. Note JetNew uses the effective-interest method of amortization.

a.   Prepare the necessary journal entries to record the issuance of the bonds, December 31, 2013 year-   end entries if required and the first interest payment.
b.   Prepare the journal entry to record the bond's maturity.
Textbook 
Financial Accounting, Canadian Edition

Financial Accounting, Canadian Edition


Edition: 5th
Authors:
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#1
6 years ago
a.   Jan.1   Cash   300,000
         Bonds Payable      300,000
   Dec.31 Interest Expense    24,000
      ($300,000 × 0.08)
         Interest Payable      24,000
   Jan.1 Interest Payable   24,000
      Cash      24,000

b.   Jan.1 Bonds Payable   300,000
      Cash      300,000
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