Barclay coWashburn Equipment Company, Inc., completed the following selected transactions:Year 1Issued $450,000 worth of 10-year, 8 percent bonds, dated February 1 of this year, at97. Interest is payable semiannually on February 1 and August 1.Paid semiannual interest on the bonds.June 1Aug. 31Dec. 31Made an adjusting entry to record accrued interest payable.31Made an adjusting entry to record amortization of bond discount.Closed the Interest Expense account.3131Year 2Jan. 1Reversed the adiusting entry for accrued interest payable.Feb. IPaid semiannual interest on the bonds.Paid semiannual interest on the bonds.Aug. 1Dec. 13131Made an adjusting entry to record accrued interest payable.31Made an adjusting entry to record amortization of bond discount.31Closed the Interest Expense account.Instructions:Record the transactions in general journal form

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Asked Dec 14, 2019
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Barclay co
Washburn Equipment Company, Inc., completed the following selected transactions:
Year 1
Issued $450,000 worth of 10-year, 8 percent bonds, dated February 1 of this year, at
97. Interest is payable semiannually on February 1 and August 1.
Paid semiannual interest on the bonds.
June 1
Aug. 31
Dec. 31
Made an adjusting entry to record accrued interest payable.
31
Made an adjusting entry to record amortization of bond discount.
Closed the Interest Expense account.
31
31
Year 2
Jan. 1
Reversed the adiusting entry for accrued interest payable.
Feb. I
Paid semiannual interest on the bonds.
Paid semiannual interest on the bonds.
Aug. 1
Dec. 1
31
31
Made an adjusting entry to record accrued interest payable.
31
Made an adjusting entry to record amortization of bond discount.
31
Closed the Interest Expense account.
Instructions:
Record the transactions in general journal form
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Barclay co Washburn Equipment Company, Inc., completed the following selected transactions: Year 1 Issued $450,000 worth of 10-year, 8 percent bonds, dated February 1 of this year, at 97. Interest is payable semiannually on February 1 and August 1. Paid semiannual interest on the bonds. June 1 Aug. 31 Dec. 31 Made an adjusting entry to record accrued interest payable. 31 Made an adjusting entry to record amortization of bond discount. Closed the Interest Expense account. 31 31 Year 2 Jan. 1 Reversed the adiusting entry for accrued interest payable. Feb. I Paid semiannual interest on the bonds. Paid semiannual interest on the bonds. Aug. 1 Dec. 1 31 31 Made an adjusting entry to record accrued interest payable. 31 Made an adjusting entry to record amortization of bond discount. 31 Closed the Interest Expense account. Instructions: Record the transactions in general journal form

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Expert Answer

Step 1

When bonds are issued at discount, the  discount on bonds needs to be amortised over the life of the bond and they are added to the interest expenses.

Step 2

The journal entry to record the transactio...

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Accounts & Explanation Debit $ Credit $ Date Year 1 1-Jun Cash Discount on bonds payable 436500 13500 Bonds Payable |(Issued $450,000 at 97) 450000 31-Aug|Interest expenses 6225 Cash(450000*8%*2/12) Discount on bonds (13500/10*2/12) |(Interest on bonds charged for 2 months) 6000 225 31-Dec Interest expenses 15563 Interest payable(450000*8%*5/12) Discount on bonds (13500/10*5/12) |(Interest on bonds accrued for 5 months) 15000 563 31-Dec Income Statement Interest expenses (Closure of interest expenses) 21788 21788

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Journal and Ledger Balance

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