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on may 1,2014 Hernon Corp issued $600,000, 9%,-5 year bonds at face value. the b

ID: 2448363 • Letter: O

Question

on may 1,2014 Hernon Corp issued $600,000, 9%,-5 year bonds at face value. the bonds were dated may 1,2014, 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 the bonds.

c-show the balance sheet presentation on December 31,2014

d-Prepare the journal entry to record payment of interest on May 1,2015, assuming no accrual of intererst from January 1,2015 to May 1, 2015

e. Prepare the journal entry to record payment of interest on November 1,2015.

f. Assume that on Nov 1,2015 Herron calls the bonds at 102. Record the redemption of the bonds.

Explanation / Answer

a)  

Balance sheet

Curretn liabilties

Interest payable                 9,000

Long term liabiliites

Bonds payable                600,000

d )

Description Debit Credit Cash $600,000 To Bonds payable $600,000 b) Interest expense $9,000 To interest payable $9,000