1.Determine the maturity date for each of the three notes described.
2.Determine the interest due at maturity for each of the three notes. Assume a 360-day year.
Check(2) Locust, $875
3.Determine the interest expense recorded in the adjusting entry at the end of Year 1.
(3) $308
4.Determine the interest expense recorded in Year 2.
(4) $252
5.Prepare journal entries for all the preceding transactions and events.
Exercise 14-3 Recording bond issuance and interest P1
On January 1, Boston Enterprises issues bonds that have a $3,400,000 par value, mature in 20 years, and pay 9% interest semiannually on June 30 and December 31. The bonds are sold at par.
How much interest will Boston pay (in cash) to the bondholders every six months?
Prepare journal entries to record (a) the issuance of bonds on January 1, (b) the first interest payment on June 30, and (c) the second interest payment on December 31.
Prepare the journal entry for issuance assuming the bonds are issued at (a) 98 and (b) 102.
Sample Solution