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Financial Accounting and Reporting Bonds issued at Face value on an Interest Date

20200613_162642.jpg

20200613_162642.jpg
ABC Company's accounting year ends on December 31. On December 31, 200a, ABC issued 10-year, 12%
bonds with a face value of P100,000, for P100,000. The bonds are dated December 31, call for semiannual
interest payments on June 30 and December 31, and mature in 10 years on December 31. ABC made the
required interest and principal payments when due.
1. Identify the entry to record the issuance of bonds on December 31.
2. Determine the entry to record the payment of interest for June 30.
3. Ten years later, the maturity date, Identify the entry for the last payment of interest and the amount of
the bond.
IN CONTEXT: Assuming that ABC bonds were dated October 31, issued on the same date, and paid interest
on October 31 and April 30. ABC must make an adjusting entry on December 31 to accrue interest earned for
November and December but not paid until April 30 of the next year.
4. Determine the entry to record the accrued interests for November and December payable in April.
5. The April 30 entry in the next year would include the accrued amount from December of last year and
interest expense for January to April of this year, Identify the entry to record payment of six (6) months
bond Interest.
6. Since the 6-month period ending October 31 occurs within the same fiscal year, identify the entry to
record the semiannual interest payments.

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