NOTES SOLD AFTER THE BEGINNING OF THE YEAR. Eagle Watch Company sold $800,000 of 5-year, 8.5% notes on November 1, 19x2, at a $7,000 discount.

Interest payments are to be made on April 30 and October 31 of each year. Eagle’s fiscal year ends December 31.

REQUIRED:

1. Prepare the entry to record the interest expense adjustment on December 31, 19x2.

2. Prepare the entry to record interest expense and the first interest payment on April 30, 19x3.

3. Prepare the entry to record interest expense and payment on October 31, 19x3.