Chapter 8
Non-Current Liabilities
391
AP-3A (
3
5
)
On April, 1, 2016, Medum Corporation issued a four‐year bond worth $421,000 with an interest
rate of 5% per annum. The bond was issued at par. Interest is to be paid semi‐annually on
September 30 and March 31, with a year-end on March 31.
Required
a) Prepare the journal entry on April 1, 2016, to issue the bonds.
Date
Account Title and Explanation
Debit
Credit
b) Prepare the journal entry on April 1, 2020, to redeem the bonds at fair value.
Date
Account Title and Explanation
Debit
Credit
AP-4A (
4
)
A company issued a $500,000 bond and received $475,000 cash on February 1. Write the
journal entry to record the transaction.
Date
Account Title and Explanation
Debit
Credit
