On July 1, 2006 the Nicholsen Corporation issued $300,000 of bonds, with a 13% face rate of

Question:

On July 1, 2006 the Nicholsen Corporation issued $300,000 of bonds, with a 13% face rate of interest, for $318,000. The bonds pay interest semiannually on each January 1 and July 1 and are to be repaid in three equal semiannual installments beginning July 1, 2008. Assume the company’s fiscal year ends May 31 and it makes reversing entries for year-end accruals.

Required

Prepare the journal entries to account for this serial bond issue on each of the following dates, using the bonds outstanding method of amortization:

1. July 1, 2006

2. January 1, 2007

3. July 1, 2007

4. January 1, 2008

5. July 1, 2008

6. January 1, 2009

7. July 1, 2009

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...