Error correction; accrued interest on bonds
Response to the following problem:
At the end of 2015, Majors Furniture Company failed to accrue $61,000 of interest expense that accrued during the last five months of 2015 on bonds payable. The bonds mature in 2029. The discount on the bonds is amortized by the straight-line method.
The following entry was recorded on February 1, 2016, when the semiannual interest was paid:
Interest expense........................73,200
Discount on bonds payable.......................1,200
Cash.....................................................72,000
Required:
Prepare any journal entry necessary to correct the errors as of February 2, 2016 when the errors were discovered. Also, prepare any adjusting entry at December 31, 2016, related to the situation described. (Ignore income taxes.)