Amoruso Co. produces and distributes semiconductors for use by computer manufacturers. Amoruso Co. issued $7,500,000 of 15-year, 10% bonds on April 1 of the current year at face value, with interest payable on April 1 and October 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions for the current year:
Apr. 1. Issued the bonds for cash at their face amount.
Oct. 1. Paid the interest on the bonds.
Dec. 31. Recorded accrued interest for three months.
Answer:
Apr. 1 Cash 7,500,000
Bonds Payable 7,500,000
Oct. 1 Interest Expense 375,000
Cash 375,000
Dec. 31 Interest Expense* 187,500
Interest Payable 187,500
* $7,500,000 × 10% × 3/12
