Question - On March 1, 2005, Andrews Corporation issued $900,000, 8%, 5-year bonds dated January 1, 2005, for $834,500, including accrued interest. The bonds pay semi-annual interest on January 1 and July 1 and mature on January 1, 2010. The company uses the straight-line method of amortization and has a calendar year end.
Instructions -
1. Prepare a journal entry to record the sale of the bond.
2. Record the semi annual payment of interest and amortization of the discount or premium.
3. Record the accrued bond interest and amortization on December 31, 2005?
4. Record the bond interest payment on January 1, 2006?
5. Record the purchase of $540,000 of the bonds at the call of 104, on January 1, 2007?