On January 1, 20X1, Security Communications, Inc., received cash, \($200,000.00,\) for a bond issue. The bond agreement provides that a bond sinking fund is to be increased by \($20,000.00\) every six months for the next five years.

Instructions

Journalize the transactions. Use page 1 of a cash receipts journal, page 8 of a cash payments journal, and page 1 of a general journal. Source documents are abbreviated as follows: check, C; memorandum, M; receipt, R.

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Transactions: Jan. 1, 20X1. Received cash for the face value of a 5-year, 9%, $1,000.00 par value bond issue, $200,000.00. R104. July 1, 20X1. Paid cash to bond trustee for semiannual interest on bond issue, $9,000.00. C294. July 1, 20X1. Jan. 1, 20X2. Jan. 1, 20X2. Paid cash to bond trustee for semiannual deposit to bond sinking fund, $20,000.00. C295. Paid cash to bond trustee for semiannual interest on bond issue, $9,000.00. C504. Paid cash to bond trustee for semiannual deposit to bond sinking fund, $19,200.00, and recorded interest earned on bond sinking fund, $800.00. C505. Jan. 4, 20X6. Received notice from bond trustee that bond issue was retired using bond sinking fund, $200,000.00. M290.