Question - Benson Industries, Inc. issued $2,000,000 of 8% debentures on May 1, 2001 and received cash totaling $1,774,526. The bonds pay interest semiannually on May 1 and November 1. The maturity date on these bonds is November 1, 2009. The firm uses the effective interest method of amortizing discounts and premiums. The bonds were sold to yield an effective interest rate of 10%.
Instructions:
1. Prepare all journal entries for 2001.
2. Prepare a partial balance sheet showing the presentation of the bonds and the interest payable at December 31, 2001.