On March 1, 2021, Stratford Lighting issued 10% bonds, dated March 1, with a face amount of $690,000. The bonds sold for $678,000 and mature on February 28, 2041 (20 years). Interest is paid semiannually on August 31 and February 28. Stratford uses the straight-line method and its fiscal year ends December 31. 1. Prepare the journal entry to record the issuance of the bonds by Stratford Lighting on March 1, 2021

2. Prepare the journal entry to record interest on August 31, 2021

3. Prepare the journal entry to accrue interest on December 31, 2021.

4. Prepare the journal entry to record interest on February 28, 2022

1. March 1, 2021

Dr Cash $678,000

Dr Discount on bonds payable $12,000

Cr Bonds payable $690,000

2. August 31, 2021

Dr Bond interest expense $34,800

Cr Discount on bonds payable $ 300

Cr Cash $34,500

3. December 31, 2021

Dr Bond interest expense $23,200

Cr Discount on bonds payable $200

Cr Bond interest payable $23,000

4. February 28, 2022

Dr Bond interest payable $23,000

Dr Bond interest expense $11,600

Cr Discount on bonds payable $100

Cr Cash $34,500

Explanation:

1. Preparation of the journal entry to record the issuance of the bonds by Stratford Lighting on March 1, 2021

Dr Cash $678,000

Dr Discount on bonds payable $12,000

($690,000-$678,000)

Cr Bonds payable $690,000

(Being to record issuance of the bonds is recorded)

2. Preparation of the journal entry to record interest on August 31, 2021

Dr Bond interest expense $34,800

Cr Discount on bonds payable $ 300 ($12,000/20*6/12 )

Cr Cash $34,500

($690,000 × 10% × 6/12)

(Being to record interest )

3. Preparation of the journal entry to accrue interest on December 31, 2021.

Dr Bond interest expense $23,200

($23,000+$200)

Cr Discount on bonds payable $200

($12,000/20 × 4 /12)

Cr Bond interest payable $23,000

($690,000* 10%× 4/12)

(Being to record accrue interest is recorded)

4. Preparation of the journal entry to record interest on February 28, 2022

Dr Bond interest payable $23,000

($690,000* 10%× 4/12)

Dr Bond interest expense $11,600

[($34,500+$100)-$23,000]

Cr Discount on bonds payable $100

($12,000/20*2/12)

Cr Cash $34,500

($690,000 × 10% × 6/12)

(Being to record interest is recorded)

the earnings of a typical investor is around $1,000,000 to $10,000,000

hope this !

have a good day!

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