Question
On October 1, 2021, Darwin Company issued $700,000, 5%, 10-year bonds at face value. The bonds were dated October 1, 2021, and pay interest annually
On October 1, 2021, Darwin Company issued $700,000, 5%, 10-year bonds at face value. The bonds were dated October 1, 2021, and pay interest annually on October 1. Accounting period ends on December 31.
Instructions
- Prepare the journal entry to record the issuance of the bonds.
- Prepare the adjusting entry to record the accrual of interest on December 31, 2021.
- Prepare the journal entry to record the payment of interest on October 1, 2022.
- Prepare the adjusting entry to record the accrual of interest on December 31, 2022.
Assume that on January 1, 2023, Darwin Company pays the accrued bond interest and calls the bonds. The call price is 104. Record the payment of interest and redemption of the bonds.
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Management Accounting Information for creating and managing value
Authors: Kim Langfield Smith, David Smith, Paul Andon, Ronald Hilton, Helen Thorne
8th edition
9781760420413 , 978-1760420406
