INTEREST PAYMENTS AND INTEREST EXPENSE FOR BONDS (STRAIGHT LINE) On December 31, 2009,Harrington Corporation sold $100,000 of

Question:

INTEREST PAYMENTS AND INTEREST EXPENSE FOR BONDS

(STRAIGHT LINE)

On December 31, 2009,Harrington Corporation sold $100,000 of 10-year, 9 percent bonds.

The bonds sold for $96,000 and pay interest semiannually on June 30 and December 31.

Required:

. Prepare the journal entry to record the sale of the bonds.

. Calculate the amount of the semiannual interest payment.

. Prepare the entry at June 30, 2010, to recognize the payment of interest and interest expense.

. Calculate the annual interest expense for 2010.

Exercise

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