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On October 1, 2011, Havenhill Corp. issued $700,000, 7%, 10-year bonds at face value. The bonds were dated October 1, 2011, and pay interest annually
On October 1, 2011, Havenhill Corp. issued $700,000, 7%, 10-year bonds at face value. The bonds were dated October 1, 2011, and pay interest annually on October 1. Financial statements are prepared annually, on December 31. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) (a) Prepare the journal entry to record the issuance of the bonds. Date Account/Description Debit Credit Oct. 1 (b) Prepare the adjusting entry to record the accrual of interest on December 31, 2011. Date Account/Description Debit Credit Dec. 31 (c) Complete the partial balance sheet below on December 31, 2011. Current liabilities Long-term liabilities (d) Prepare the journal entry to record the payment of interest on October 1, 2012. Date Account/Description Debit Credit Oct. 1 (e) Prepare the adjusting entry to record the accrual of interest on December 31, 2012. Date Account/Description Debit Credit Dec. 31 (f) Assume that on January 1, 2013, Havenhill pays the accrued bond interest and calls the bonds. The call price is 102. Record the payment of interest and redemption of the bonds. Date Account/Description Debit Credit Jan. 1 (To record the payment of accrued interest.) Jan. 1 (To record the redemption of the bonds.)
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