Journalize basic bond payable transactions and bonds issued at par
Response to the following problem:
AJR Corp. issued 4% seven-year bonds payable with a face amount of $150,000 when the market interest rate was 4%. Assume that the accounting year of AJR ends on December 31 and that bonds pay interest on January 1 and July 1.
Journalize the following transactions for AJR. Include an explanation for each entry.
a. Issuance of the bonds payable at par on July 1, 2014
b. Accrual of interest expense on December 31, 2014 (rounded to the nearest dollar)
c. Payment of cash interest on January 1, 2015
d. Payment of the bonds payable at maturity (give the date)