Question - On June 1, 2015, Johnson Co. issued $4,000,000, 9%, 5-year bonds at face value. The bonds were dated June 1, 2015, and pay interest semiannually on June 1 and Dec 1. Financial statements are prepared annually on Dec 31.
Instructions
(1) Prepare the journal entry to record the issuance of the bonds.
(2) Prepare the adjusting entry to record the accrual of interest on 12/31/15.
(3) Show the balance sheet presentation of all bond related accounts (bonds and interest) on 12/31/15.
(4) Prepare the journal entry to record payment of interest on June 1, 2016, assuming no accrual of interest from 1/1/16 to 6/1/16.
(5) Prepare the journal entry to record payment of interest on 12/1/16.
(6) Assume that on 12/1/16, after making the interest payment, Perry calls the bonds at 102. Record the redemption of the bonds.