On May 1, year 1, Star Communications issued at par $20 million of 9%, 20-year bonds payable.

Question:

On May 1, year 1, Star Communications issued at par $20 million of 9%, 20-year bonds payable. Interest is payable semiannually each May 1 and November 1.

a. What is the amount of cash paid to bondholders for interest during year 1? $

b. Prepare the adjusting journal entry necessary at December 31, year 1 regarding this bond issue.

c. Interest expense on this bond issue reported in Star’s year 1 income statement is: $

d. With respect to this bond issue, Star’s balance sheet at December 31, year 1, includes bonds payable of $ and interest payable of $

e. Prepare the journal entry made by Star on May 1, year 2, to record the semiannual payment of interest to bondholders.

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...