I need help with an accounting problem.?

Question

Wolfe Co. issued $12,000,000 of ten-year, 8% bonds on May 1 of the current year, with interest payable on May 1 and Nov. 1. The fiscal year of the company is the calender year. Journalize the entries to record the following selected transactions for the current year.

May 1. Issued the bonds for cash at their face amount.

Nov. 1. Paid the interest on the bonds.

Dec. 31. Recorded accrued interest for two months.

I have attempted this problem several times and can't seem to get it right. So I was hoping someone here could show me the right way of doing this problem.

Answer 1

May 1. Issued the bonds for cash at their face amount

Dr  Cash $12,000,000

Cr  Bonds payable $12,000,000

Nov. 1. Paid the interest on the bonds

Dr  Interest expense $480,000 ($12m x 8% x 6/12)

Cr  Cash $480,000

Dec. 31. Recorded accrued interest for two months

Dr  Interest expense $160,000 ($12m x 8% x 2/12)

Cr  Interest payable $160,000