Worthington Company issued $1,000,000 face value, six-year, 10% bonds on 7/1/2012, when the market rate of interest was 12%. Interest payments are due every 7/1 and 1/1. Worthington uses a calendar year end.
Required
1. Prepare the journal entry to record the issuance of the bonds on 7/1/2012.
2. Prepare the adjusting journal entry on 12/31/2012, to accrue interest expense.
3. Prepare the journal entry to record the interest payment on 1/1/2013.
4. Calculate the amount of cash that will be paid for the retirement of the bonds on the maturity date.