On May 1, 2010, Newby Corp. issued $600,000, 9%, 5-year bonds at face value. The bonds were
Question:
On May 1, 2010, Newby Corp. issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2010, and pay interest semiannually on May 1 and November 1. Financial statements are prepared annually on December 31.
Instructions
(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, 2010.
(c) Show the balance sheet presentation on December 31, 2010.
(d) Prepare the journal entry to record payment of interest on May 1, 2011, assuming no accrual of interest from January 1, 2011, to May 1, 2011.
(e) Prepare the journal entry to record payment of interest on November 1, 2011.
(f) Assume that on November 1, 2011, Newby calls the bonds at 102. Record the redemption of the bonds.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
a 2010 May 1 Cash 600000 Bonds Payable 600000 b Dec ...View the full answer
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
