1. Farmland County borrowed $100,000 on a 10-year, 7% installment note payable on January 1, Year 1. The terms of the note require Farmland to pay 10 equal payments of $14,238 each December 31 for 10 years. The required general journal entry to record the first payment on the note on December 31, Year 1 is:
2. On May 1 of the current year, a company paid $200,000 cash to purchase 6%, 10-year bonds with a par value of $200,000; interest is paid semiannually each May 1 and November 1. The company intends to hold these bonds until they mature.
(a) Prepare the journal entry to record the bond purchase.
(b) Prepare the journal entry to record the receipt of the first semiannual interest payment on November 1.
(c) Prepare the journal entry for the accrual of interest for the year-end December 31.
3.A company paid $600,000 for 10% bonds with a par value of $600,000 on September 1. The bonds pay 5% interest semiannually on September 1 and March 1. The company intends to hold the bonds until they mature. Prepare the journal entries for the following dates and transactions related to this bond acquisition. (1) Bonds purchased on September 1. (2) Year-end adjusting entry, December 31. (3) Receipt of semiannual interest March 1. (4) Redemption of the bonds at maturity on August 31.