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L & L Underwriters issued the following bonds:
| Date of issue and sale: | April 1, 20-1 |
| Principal amount: | $400,000 |
| Sale price of bonds: | 100 |
| Denomination of bonds: | $1,000 |
| Life of bonds: | 20 years |
| Stated rate: | 9%, payable semiannually on September 30 and March 31 |
Required:
| | Prepare journal entries for: |
| | (a) Issuance of the bonds. |
| | (b) Interest payment on the bonds on September 30. |
| | (c) Year-end adjustment on the bonds. |
| |
| CHART OF ACCOUNTS |
| L & L Underwriters |
| General Ledger |
| | ASSETS | | 101 | Cash | | 122 | Accounts Receivable | | 141 | Supplies | | 181 | Office Equipment | | | LIABILITIES | | 202 | Accounts Payable | | 219 | Wages Payable | | 252 | Bonds Payable | | 253 | Bond Interest Payable | | | EQUITY | | 321 | Common Stock | | 322 | Paid-In Capital in Excess of Par-Common Stock | | 329 | Paid-In Capital from Sale of Treasury Stock | | 331 | Retained Earnings | | 333 | Cash Dividends | | |
a) Prepare journal entries for the issuance of the bonds.
General Journal Instructions
PAGE 1
GENERAL JOURNAL
| | DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT |
| 1 | | | | | |
| 2 | | | | | |
(b) Prepare journal entries for the interest payment on the bonds on September 30.
PAGE 1
GENERAL JOURNAL
| | DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT |
| 1 | | | | | |
| 2 | | | | | |
(c) Prepare journal entries for the year-end adjustment on the bonds.
PAGE 1
GENERAL JOURNAL
| | DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT |
| 1 | | Adjusting Entries | | | |
| 2 | | | | | |
| 3 | | | | | |
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