Answer:
The journal entries are as follows:
(a) On January 1,
Cash A/c Dr. $10,000
To bonds payable $10,000
(To record the issuance of the bonds)
(b) On June 30,
Interest Expense A/c Dr. $300
To cash A/c $300
(To record the first interest payment on June 30)
Workings:
Interest expense:
= Amount of bonds issued × Time period × Interest rate
= $10,000 × (6/12) × 6%
= $300
The journal entries are the part of accounting system and the first stage in the accounting cycle. It provides dual effect of each transaction, that is it follows dual entry bookkeeping system.
a) The journal entry for the issuance of the bond will increase the cash balance of the company and it will also increase the liabilities of the company.
b) The journal entry for the interest payment will increase expenses and decrease the cash balance of the company.
The journal entries are shown in the image attached below.
Working Note:
Computation of interest expense:
[tex]\begin{aligned}\text{Interest Expense}&=\text{ Amount of Bonds Issued}\times\text{Time Period}\\&\times\text{Interest Rate}\\&=\$10,000\times\frac{6}{12}\times6\%\\&= \$300\end{aligned}[/tex]
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https://brainly.com/question/17439126
