Problem 5 : Bonds Payable

Janeway Corporation issued $200,000 of 9%, 5 year bonds at 98 on January 1, 2012. Interest is Payable annually on January 1.

A. Compute Janeways total interest expense for the 5 years.

B. Prepare Janeways January 1, 2012 entry to record the issuance of the bonds.

C. Prepare Janeways December 31, 2012 entry to record accrual of interest and amortization.

D. Indicate the net ammounts Janeway would report as a current liability and as a long-term liability in their December 31, 2012 balance sheet. Show Computations.

Current Liability $___________

Long-term Liability $__________