Worthington Company issued $1,000,000 face value, six-year, 10% bonds on July 1, 2010, when the market rate of interest was 12%. Interest payments are due every July 1 and Janary 1. Worthington uses a calendar year-end.
1. Prepare the journal entry to record the issuance of the bonds on July 1, 2010
2. Prepare the adjusting journal entry on December 31, 2010, to accrue the interest expense.
3. Prepare the journal entry to record the interest payment on January 1, 2011.