E12-5 (Entries for Bond Transactions) Presented below are two independent situations.

1. On January 1, 2008, Paul Simon Company issues $200,000 of 9%, 10-year bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1.

2. On January 1, 2008, Graceland Company issued $100,000 of 12%, 10-year bonds dated June 1 at par. Interest is payable semianually on July 1 and January 1.

INSTRUCTIONS

For each of these two independent sutuations, prepare journal entries to record:

a) the issuance of the bonds

b) the payment of interest on July 1.

c) the accrual of interest on Decembefr 31.