Accounting for Long-Term Liabilities
Energy Corporation had the following transactions relating to its long-term liabilities for the
year:
a. Issued a $30,000, three-year, 8% note payable to White Corporation for a truck purchased
on January 2. Interest is payable annually on December 31 of each year.
b. Issued $300,000 of 12%, 10-year bonds on July 1. The market rate on the date of issuance
was 12%. Interest payments are made on June 30 and December 31 of each year.
c. Purchased a warehouse on December 1 by borrowing $250,000. The terms of the
mortgage call for monthly payments of $2,194 for 30 years to be made at the end of
each month. The interest rate on the mortgage is 10%.
Required:
Make all journal entries required during the year to account for the above liabilities. Energy
Corporation reports on a calendar-year basis.