On June 1, 2014, Sator Corp. issued $1,200,000, 8%, 5-year bonds at face value. Prepare entries to record The bonds were dated June 1, 2014, and pay interest semiannually on June 1 and Decem- —tssuance of bonds, interest ber 1. Financial statements are prepared annually on December 31. accrual, and bond redemption.

Instructions (LO 5, 6, 8)

(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, 2014.

(c) Show the balance sheet presentation on December 31, 2014.

(d) Prepare the journal entry to record payment of interest on June 1, 2015, assuming no (q) Int. exp. $40,000 accrual of interest from January 1, 2015, to June 1, 2015.

(e) Prepare the journal entry to record payment of interest on December 1, 2015.

(f) Assume that on December 1, 2015, Sator calls the bonds at 101. Record the redemption of the bonds.