On May 1, 2015, Herron Corp. issued $600,000, 9%, 5-year bonds at face value. The bonds were

Question:

On May 1, 2015, Herron Corp. issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2015 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, 2015.
(c) Show the presentation on December 31, 2015.
(d) Prepare the journal entry to record payment of interest on May 1, 2016, assuming no accrual of interest from January 1, 2016, to May 1, 2016.
(e) Prepare the journal entry to record payment of interest on November 1, 2016.
(f) Assume that on November 1, 2016, Herron calls the bonds at 102. Record the redemption of the bonds.

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...