Question: Australian Balloon Rides Ltd. issues $4,000,000 of five-year, 4% bonds dated January 1, 2018. Interest is payable on January 1 and July 1 each year.

Australian Balloon Rides Ltd. issues $4,000,000 of five-year, 4% bonds dated January 1, 2018. Interest is payable on January 1 and July 1 each year. The proceeds realized from the issue were the $4,200,000 sales price less the $20,000 fee charged by Balloon’s lawyers. Balloon’s year-end is December 31.

Required:

Prepare journal entries to record:
a. The issuance of the bonds.
b. Payment of interest and related amortization on July 1, 2018.
c. Accrual of interest and related amortization on December 31, 2018.

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a The journal entries for the issuance of the bonds is as follows i The Bonds Payable 70000 ii ExpenseBonds Issued 70000 iii Bonds Payable 20000 The e... View full answer

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