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Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Navarez Inc., whose fiscal year is the calendar year: 2014 July
Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Navarez Inc., whose fiscal year is the calendar year: 2014 July 1. Issued $88,000,000 of 10-year, 10% callable bonds dated July 1, 2014, at a market (effective) rate of 12%, receiving cash of $77,906,048. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $240,000 by Issuing a five-year, 5% installment note to Setzer Bank. The note requires annual payments of $55,434, with the first payment occurring on September 30, 2015. Dec. 31. Accrued $3,000 of interest on the installment note. The Interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount is amortized annually In a separate journal entry 31. Recorded bond discount amortization of $504,698, which was determined using the straight-line method. 31. Closed the interest expense account. 2015 June 30. Paid the semiannual interest on the bonds. The bond discount is amortized annually in a separate journal entry Sept. 30. Paid the annual payment on the note, which consisted of Interest of $12,000 and principal of $43,434. Dec. 31. Accrued $2,457 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond discount is amortized annually in a separate journal entry 31. Recorded bond discount amortization of $1,009,396, which was determined using the straight-line method. 31. Closed the interest expense account
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