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On January 1, Year 1, McClurg Corporation issues 5%, 11-year bonds with a face amount of $70,000 for $76,180. The market interest rate is 4%. Interest is paid semiannually on June 30 and December 31. Complete the necessary journal entry for the issuance of the bonds by selecting the account names from the drop-down menus and entering the associated dollar amounts. Record the issuance of 5%, 11-year bonds with a face value of $70,000 for $76,180

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Answer and Explanation:

The journal entry to record the issuance of the bond is given below:

cash $76,180

   To premium on bonds payable $6,180 ($76180 - $70000)

   To bonds payable $70,000

(Being the issuance of the bond is recorded)

here the cash is debited as it increased the assets and credited the premium on bond payable & bond payable as it also increased the liabilities

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