On April 30, 2016, Alpha Company issued $100,000 of 12%, 10-year bonds. The bonds were issued at...

Question:

On April 30, 2016, Alpha Company issued $100,000 of 12%, 10-year bonds. The bonds were issued at par plus accrued interest and are dated January 1, 2016. Interest is paid on July 1 and January 1. Use this information to prepare the General Journal entry (without explanation) for the April 30, 2016 issue of the bonds. If no entry is required then write ''No Entry Required.''

Long-Term Debt

Long-term debts are the firm's commitments and obligations in which have a maturity date of more than one year. Long-term debts are recorded as non-current liabilities in the firm's balance sheet.

Answer and Explanation:

To record the issuance at par plus accrued interest from January 1 to April 30.

Accounts Debit Credit
Cash 100,000
Interest Expense (100,000 * 12% * 4/12) 4,000
Bonds Payable 100,000
Accrued Interest Payable 4,000

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Long-Term Debt: Definition, Cost & Formula

from Financial Accounting: Help and Review

Chapter 8 / Lesson 7
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