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  • On January 1 2004 ABC Company Issued Bonds of Rs.500,000/-For Six Years @10%

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    The document describes the journal entries required for interest payments on bonds issued by ABC Company for Rs. 500,000 at 10% interest per year over 6 years. It provides the calculations and entries for interest paid quarterly, semi-annually, annually and monthly. For each case, interest expense is debited and cash is credited for the interest amount each period. At maturity, bonds payable is debited and cash credited to pay off the principal.

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    Naeem Shah

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    The document describes the journal entries required for interest payments on bonds issued by ABC Company for Rs. 500,000 at 10% interest per year over 6 years. It provides the calculations and entries for interest paid quarterly, semi-annually, annually and monthly. For each case, interest expense is debited and cash is credited for the interest amount each period. At maturity, bonds payable is debited and cash credited to pay off the principal.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    31 views8 pages

    On January 1 2004 ABC Company Issued Bonds of Rs.500,000/-For Six Years @10%

    Uploaded by

    jugnoo4u
    The document describes the journal entries required for interest payments on bonds issued by ABC Company for Rs. 500,000 at 10% interest per year over 6 years. It provides the calculations and entries for interest paid quarterly, semi-annually, annually and monthly. For each case, interest expense is debited and cash is credited for the interest amount each period. At maturity, bonds payable is debited and cash credited to pay off the principal.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 8

    On January 1st 2004 ABC company issued bonds of Rs.

    500,000/- for six years


    @10%
    Pass the necessary entries in the following cases:

    When interest is paid;

    a) Quarterly
    b) Semi Annually
    c) Annually
    d) Monthly

    Solution case (a)

    Calculation of interest

    500,000*10%=50,000

    50,000/12= 4166.6*3=12,500

    Date Description Dr.(Rs.) Cr. (RS.)


    Jan31st,2004 Cash 500,000
    Bonds payable 500,000
    st
    March31 ,2004 Interest expense 12,500
    Cash 12,500
    June30,2004 Interest expense 12,500
    Cash 12,500
    st
    Sep 30 ,2004 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 ,2004 Interest expense 12,500
    Cash 12,500
    March31st,2005 Interest expense 12,500
    Cash 12,500
    June30,2005 Interest expense 12,500
    Cash 12,500
    Sep 30st,2005 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 ,2005 Interest expense 12,500
    Cash 12,500
    st
    March31 ,2006 Interest expense 12,500
    Cash 12,500
    June30,2006 Interest expense 12,500
    Cash 12,500
    Sep 30st,2006 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 ,2006 Interest expense 12,500
    Cash 12,500
    March31st,2007 Interest expense 12,500
    Cash 12,500
    June30,2007 Interest expense 12,500
    Cash 12,500
    Sep 30st,2007 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 ,2007 Interest expense 12,500
    Cash 12,500
    st
    March31 ,2008 Interest expense 12,500
    Cash 12,500
    June30,2008 Interest expense 12,500
    Cash 12,500
    st
    Sep 30 ,2008 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 ,2008 Interest expense 12,500
    Cash 12,500
    st
    March31 ,2009 Interest expense 12,500
    Cash 12,500
    June30,2009 Interest expense 12,500
    Cash 12,500
    st
    Sep 30 ,2009 Interest expense 12,500
    Cash 12,500
    Dec 31st,2009 Interest expense 12,500
    Cash 12,500
    st
    March31 ,2010 Interest expense 12,500
    Cash 12,500
    June30,2010 Interest expense 12,500
    Cash 12,500
    st
    Sep 30 ,2010 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 ,2010 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 2010 Bonds Payable 500,000
    Cash 500,000
    Case (b): Semi Annually

    Calculation of interest:

    500,000*10%=50,000 P.A

    50,000/12=4166.66*6=25000 S.A

    Jan31st,2004 Cash 500,000


    Bonds payable 500,000
    June30,2004 Interest expense 12,500
    Cash 12,500
    st
    Dec31 ,2004 Interest expense 12,500
    Cash 12,500
    June30,2005 Interest expense 12,500
    Cash 12,500
    Dec31st,2005 Interest expense 12,500
    Cash 12,500
    June30,2006 Interest expense 12,500
    Cash 12,500
    st
    Dec31 ,2006 Interest expense 12,500
    Cash 12,500
    June30,2007 Interest expense 12,500
    Cash 12,500
    st
    Dec31 ,2007 Interest expense 12,500
    Cash 12,500
    June30,2008 Interest expense 12,500
    Cash 12,500
    Dec31st,2008 Interest expense 12,500
    Cash 12,500
    June30,2009 Interest expense 12,500
    Cash 12,500
    Dec31st,2009 Interest expense 12,500
    Cash 12,500
    June30,2010 Interest expense 12,500
    Cash 12,500
    st
    Dec31 ,2010 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 2010 Bonds Payable 500,000
    Cash 500,000
    Case(c): Annually

    Calculation of interest:

    500,000*10%=50,000 P.A

    Jan31st,2004 Cash 500,000


    Bonds payable 500,000
    Dec31st,2004 Interest expense 12,500
    Cash 12,500
    st
    Dec31 ,2005 Interest expense 12,500
    Cash 12,500
    st
    Dec31 ,2006 Interest expense 12,500
    Cash 12,500
    st
    Dec31 ,2007 Interest expense 12,500
    Cash 12,500
    Dec31st,2008 Interest expense 12,500
    Cash 12,500
    Dec31st,2009 Interest expense 12,500
    Cash 12,500
    Dec31st,2010 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 2010 Bonds Payable 500,000
    Cash 500,000
    Case (d): Monthly interest

    Calculation of interest:

    500,000*10%=50,000

    50,000/12=4167

    Jan1st,2004 Cash 500,000


    Bonds payable 500,000
    Jan31st,2004 Interest expense 12,500
    Cash 12,500
    Feb28st,2004 Interest expense 12,500
    Cash 12,500
    st
    March31 ,2004 Interest expense 12,500
    Cash 12,500
    st
    April30 ,2004 Interest expense 12,500
    Cash 12,500
    st
    May31 ,2004 Interest expense 12,500
    Cash 12,500
    June30st,2004 Interest expense
    Cash 12,500 12,500
    July31st,2004 Interest expense 12,500
    Cash 12,500
    Aug31st,2004 Interest expense 12,500
    Cash 12,500
    st
    Sep30 ,2004 Interest expense 12,500
    Cash 12,500
    st
    Oct31 ,2004 Interest expense 12,500
    Cash 12,500
    st
    Nov30 ,2004 Interest expense 12,500
    Cash 12,500
    Dec31st,2004 Interest expense 12,500
    Cash 12,500
    Jan31st,2005 Interest expense 12,500
    Cash 12,500
    Feb28st,2005 Interest expense 12,500
    Cash 12,500
    st
    March31 ,2005 Interest expense 12,500
    Cash 12,500
    st
    April30 ,2005 Interest expense 12,500
    Cash 12,500
    st
    May31 ,2005 Interest expense 12,500
    Cash 12,500
    st
    June30 ,2005 Interest expense 12,500
    Cash 12,500
    July31st,2005 Interest expense 12,500
    Cash 12,500
    Aug31st,2005 Interest expense 12,500
    Cash 12,500
    Sep30st,2005 Interest expense 12,500
    Cash 12,500
    st
    Oct31 ,2005 Interest expense 12,500
    Cash 12,500
    st
    Nov30 ,2005 Interest expense 12,500
    Cash 12,500
    st
    Dec31 ,2005 Interest expense 12,500
    Cash 12,500
    Jan31st,2006 Interest expense 12,500
    Cash 12,500
    Feb28st,2006 Interest expense 12,500
    Cash 12,500
    March31st,2006 Interest expense 12,500
    Cash 12,500
    April30st,2006 Interest expense 12,500
    Cash 12,500
    May31st,2006 Interest expense 12,500 12,500
    Cash
    June30st,2006 Interest expense 12,500
    Cash 12,500
    July31st,2006 Interest expense 12,500
    Cash 12,500
    st
    Aug31 ,2006 Interest expense
    Cash 12,500 12,500
    st
    Sep30 ,2006 Interest expense 12,500
    Cash 12,500
    Oct31st,2006 Interest expense 12,500
    Cash 12,500
    Nov30st,2006 Interest expense 12,500
    Cash 12,500
    st
    Dec31 ,2006 Interest expense 12,500
    Cash 12,500
    st
    Jan31 ,2007 Interest expense 12,500
    Cash 12,500
    st
    Feb28 ,2007 Interest expense 12,500
    Cash 12,500
    March31st,2007 Interest expense 12,500
    Cash 12,500
    April30st,2007 Interest expense 12,500
    Cash 12,500
    May31st,2007 Interest expense 12,500
    Cash 12,500
    June30st,2007 Interest expense 12,500
    Cash 12,500
    st
    July31 ,2007 Interest expense 12,500
    Cash 12,500
    st
    Aug31 ,2007 Interest expense 12,500
    Cash 12,500
    st
    Sep30 ,2007 Interest expense 12,500
    Cash 12,500
    Oct31st,2007 Interest expense 12,500
    Cash 12,500
    Nov30st,2007 Interest expense 12,500
    Cash 12,500
    Dec31st,2007 Interest expense 12,500
    Cash 12,500
    Jan31st,2008 Interest expense 12,500
    Cash 12,500
    st
    Feb28 ,2008 Interest expense 12,500
    Cash 12,500
    st
    March31 ,2008 Interest expense 12,500
    Cash 12,500
    April30st,2008 Interest expense 12,500
    Cash 12,500
    May31st,2008 Interest expense 12,500
    Cash 12,500
    June30st,2008 Interest expense 12,500
    Cash 12,500
    st
    July31 ,2008 Interest expense 12,500
    Cash 12,500
    st
    Aug31 ,2008 Interest expense 12,500
    Cash 12,500
    st
    Sep30 ,2008 Interest expense 12,500
    Cash 12,500
    Oct31st,2008 Interest expense 12,500
    Cash 12,500
    Nov30st,2008 Interest expense 12,500
    Cash 12,500
    Dec31st,2008 Interest expense 12,500
    Cash 12,500
    st
    Jan31 ,2009 Interest expense 12,500
    Cash 12,500
    st
    Feb28 ,2009 Interest expense 12,500
    Cash 12,500
    st
    March31 ,2009 Interest expense 12,500
    Cash 12,500
    st
    April30 ,2009 Interest expense 12,500
    Cash 12,500
    st
    May31 ,2009 Interest expense 12,500
    Cash 12,500
    st
    June30 ,2009 Interest expense 12,500
    Cash 12,500
    st
    July31 ,2009 Interest expense 12,500
    Cash 12,500
    st
    Aug31 ,2009 Interest expense 12,500
    Cash 12,500
    Sep30st,2009 Interest expense 12,500
    Cash 12,500
    st
    Oct31 ,2009 Interest expense 12,500
    Cash 12,500
    Nov30st,2009 Interest expense 12,500
    Cash 12,500
    st
    Dec31 ,2010 Interest expense 12,500
    Cash 12,500
    st
    Jan31 ,2010 Interest expense 12,500
    Cash 12,500
    Feb28st,2010 Interest expense 12,500
    Cash 12,500
    st
    March31 ,2010 Interest expense 12,500
    Cash 12,500
    April30st,2010 Interest expense 12,500
    Cash 12,500
    st
    May31 ,2010 Interest expense 12,500
    Cash 12,500
    June30st,2010 Interest expense 12,500
    Cash 12,500
    st
    July31 ,2010 Interest expense 12,500
    Cash 12,500
    st
    Aug31 ,2010 Interest expense 12,500
    Cash 12,500
    st
    Sep30 ,2010 Interest expense 12,500
    Cash 12,500
    st
    Oct31 ,2010 Interest expense 12,500
    Cash 12,500
    st
    Nov30 ,2010 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 ,2010 Interest expense 12,500
    Cash 12,500
    st
    Dec 31 2010 Bonds Payable 500,000
    Cash 500,000

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