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5 June, 23:53

Ivanhoe Corporation issued $468,000 of 6% bonds on May 1, 2020. The bonds were dated January 1, 2020, and mature January 1, 2023, with interest payable July 1 and January 1. The bonds were issued at face value plus accrued interest. Prepare Ivanhoe's journal entries for (a) the May 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry

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  1. 6 June, 01:30
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    May 1, 2020

    Dr Cash $477,360

    Cr Bonds Payable $468,000

    Cr Interest Expense $9,360

    July 1, 2020

    Dr Interest Expense $14,040

    Cr Cash $14,040

    Dec 31, 2020

    Dr Interest Expense $14,040

    Cr Interest Payable $14,040

    Explanation:

    May 1, 2020

    Dr Cash $477,360

    Cr Bonds Payable $468,000

    Cr Interest Expense $9,360

    (Accrued Interest = 468,000 x 6% x 4/12)

    July 1, 2020

    Dr Interest Expense $14,040

    Cr Cash $14,040

    (Bond interest expense = $468,000 x 6% x 6/12)

    Dec 31, 2020

    Dr Interest Expense $14,040

    Cr Interest Payable $14,040
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