Westover Corporation had $500,000, 10-year bonds outstanding on December 31, 2014 (end of the accounting period). Interest

Question:

Westover Corporation had $500,000, 10-year bonds outstanding on December 31, 2014 (end of the accounting period). Interest is payable each December 31. The bonds were issued on January 1, 2014.

The company uses the straight-line method to amortize any premium or discount. The December 31, 2014, annual financial statements showed the following:

Income statement

Bond interest expense $ 23,100

Balance sheet

Bonds payable (net liability) 481,100

Required (show computations):

1. What was the issue price of the bonds? Give the journal entry to record the issuance of the bonds.

2. Give the entry to record 2014 interest.

Financial Statements
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