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On January 1, 2020, Crane Corporation issued $660,000, 6%, 10-year bonds at face value. Interest is payable annually on January 1. Crane Corporation has a calendar year end.Prepare all entries related to the bond issue for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)2020Account Titles and ExplanationDebitCreditenter an account title for the journal entry on January 1enter a debit amount enter a credit amount enter an account title for the journal entry on January 1enter a debit amount enter a credit amount enter an account title for the journal entry on December 31enter a debit amount enter a credit amount enter an account title for the journal entry on December 31enter a debit amount enter a credit amount

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Answer:

Dr cash   $660,000

Cr bonds payable       $660,000

Dr interest expense     $ 39,600.00  

Cr interest payable                           $39,600.00  

Explanation:

The issue of the bonds at face value implies that cash proceeds equal the face value of $660,000 which is then debited to cash account and credited to bonds payable.

The interest due on the bonds on 31st December payable on 1st January 2021 =face value*coupon rate

face value is $660,000

coupon rate is 6%

interest=$660,000*6%=$39,600.00  

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