Intermediate Accounting Question -
Debt Issue costs, issuance: expensing: early extinguishment: straight line interest.
Cupola Fan Corporation issued 10% 400,000, 10 year bonds for 385,000 on June 30, 2013 Debt issue cost were 1,500. Interest is paid semiannually on December 31 and June 30. One year from issue date July 1 2014. the corporation exercised its call privilege and retired the bonds for 395,000. The corporation uses the straight line method both to determine interest expense and to amortize debt issue costs.
Requirements
1. Prepare the journal entry to record the issuance of the bonds.
2. Prepare the journal entry to record the payment of interest and amortization of debt issue costs on December 31, 2013.
3. Prepare journal entries to record the payment of interest and amortization of debt issue cost on June 30, 2014.
4. Prepare the journal entry to record the call of the bonds.