Bonds Payable
Scientific Engineering Company received authorization on July 1, 2009, to issue $300,000 of
12% bonds. The maturity date of the bonds is July 1, 2029. Interest is payable on January 1
and July 1 of each year. The bonds were sold for $289,200 on July 1, 2009 (the same day as
authorized). Scientific Engineering uses straight-line amortization.
Required:
1. Compute the approximate effective interest rate for the bonds.

2. Record the journal entries on:
a. July 1, 2009.
b. December 31, 2009.
c. January 1, 2010.
d. July 1, 2010.
e. December 31, 2010.
3. Record the journal entries on July 1, 2029, for the final interest payment and the
retirement of the bonds.