Two independent situations follow: 1. On January 1, 2014, Divac Limited issued $300,000 of 10-year, 9% bonds

Question:

Two independent situations follow:

1. On January 1, 2014, Divac Limited issued $300,000 of 10-year, 9% bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1.

2. On June 1, 2014, Verbitsky Inc. issued at par, plus accrued interest, $200,000 of 10-year, 12% bonds dated January 1. Interest is payable semi-annually on July 1 and January 1.

Instructions

For each of these two independent situations, prepare journal entries to record:

(a) The issuance of the bonds

(b) The payment of interest on July 1