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Exercise 14-11 On February 1, 2021, Strauss-Lombardi issued 9% bonds, dated February 1, with a face amount of $620,000. The bonds sold for $566,810 and
Exercise 14-11 On February 1, 2021, Strauss-Lombardi issued 9% bonds, dated February 1, with a face amount of $620,000. The bonds sold for $566,810 and mature on January 31, 2041 (20 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. Strauss-Lombardi's fiscal year ends December 31. Prepare the necessary journal entries on the dates shown below. Issuance Date 2/1/21 Credit Account Cash Discount on Bonds Payable Bonds Payable Debit 566,810 53,190 Correct 620,000 Credit Interest expense Date Account 7/31/21 Interest Expense Discount on Bonds Payable Cash Debit 28,340 Correct 440 27.900 Debit Credit Interest expense Date Account 12/31/21 Discount on Bonds Payable Debit Credit Interest expense Date Account 1/31/22 Interest Expense Interest Payable Discount on Bonds Payable Cash
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