The board of directors of Harmony Electronics authorizes the issue of $8,000,000 of 10%, 25-year bonds payable.

Question:

The board of directors of Harmony Electronics authorizes the issue of $8,000,000 of 10%, 25-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May 31, 2016, at par.

Requirements

1. Journalize the following transactions:

a. Issuance of the bonds on May 31, 2016

b. Payment of interest on November 30, 2016

c. Accrual of interest on December 31, 2016

d. Payment of interest on May 31, 2017

2. Report interest payable and bonds payable as they would appear on the Harmony Electronics balance sheet at December 31, 2016.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...