On may 1,2011 Newby Corp issues $600,00, 9% 5-year bonds at face value. The bond

Question

On may 1,2011 Newby Corp issues $600,00, 9% 5-year bonds at face value. The bonds were dated may 1, 2011 and pay interest semiannually on may 1 and november 1 financial statements are prepared annually on december 31

a. Prepare the journal entry to record the issuance of the bonds
b. Prepare the adjusting entry to record the accrual of interest on December 31, 2011
c. Show the blanace sheet presentation on December 31, 2011
d. Prepare the journal entry to record payment of interest on May 1, 2012 assuming no accrual of interest from january 1, 2012 to may 1, 2012
e. prepare the journal entry to record payment of interst on November 1, 2012
f. assume that on november 1, 2012 newby calls the bonds at 102. Record the redemtion of the bonds

Explanation / Answer

a. Debit Cash 600,000 Credit Bonds Payable 600,000 b. Debit Bond Interest Expense 9000 Credit Bond Interest Expense Payable 9000 c. Current Liabilities Bond Interest Expense Payable 9000 Long-term liabilities Bonds payable 600,000 d. Debit Bond Interest Expense 18000 Debit Bond Interest expense payable 9000 Credit Cash 27000 e. Debit Bond Interest Expense 27000 Credit cash 27000 f. Debit Bonds Payable 600,000 Debit Loss on Bond Retirement 12,000 Credit Cash 612,000

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