Question Details

Journalize the payment of the bond interest 


Ex. 1
On January 1, Porter Corporation issued $600,000, 6%, 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1.

Instructions
Prepare journal entries to record the
(a)	Issuance of the bonds.
(b)	Payment of interest on July 1, assuming no previous accrual of interest.
(c)	Accrual of interest on December 31.

Ex. 2
The following section is taken from Brown Corp- statement of financial position at December 31, 2010.
	Current liabilities
			Bond interest Payable	$    90,000
	Non-current liabilities
			Bonds Payable, 9%, due January 1, 2015 	 2,000,000

Interest is payable semiannually on January 1 and July 1. The bonds are callable on any interest date.

Instructions
(a)	Journalize the payment of the bond interest on January 1, 2011.
(b)	Assume that on January 1, 2011, after paying interest, Brown calls bonds having a face value of $800,000. The call price is 104. Record the redemption of the bonds.
(c)	Prepare the entry to record the payment of interest on July 1, 2011, assuming no previous accrual of interest on the remaining bonds.




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