Q1. On January 1, 2007, a company issued 10-year, 10% bonds payable with a par value of $500,000, and received $442,647 in cash proceeds. The market rate of interest at the date of issuance was 12%. The bonds pay interest semiannually on July 1 and January 1. The issuer uses the straight-line method for amortization. Prepare the issuer's journal entry to record the first semiannual interest payment on July 1, 2007.
Q2. Texana Inc. imports inventory from Mexico. Prepare the journal entries for Texana to record the following transactions. Include any year-end adjustments.
Dec 21 Purchased inventory from Acquilla for $500,000 Mexican pecos. The exchange rate was $0.0914 per peso. The credit terms were n/30
Dec 31 The exchange rate was 0.0917 per peso
Jan 20 Paid Acquilla Co. for the December 21 purchase. The exchange rate was $0.0920 per peso