Worthington Company issued $1,000,000 face value, six-year, and 10 percent bonds on July 1, 2012, when the market rate of interest was 12%. Interest payments are due every July 1 and January 1. Worthington employs a calendar year-end.
Make the journal entry to record the issuance of the bonds on July 1, 2012. Make the adjusting journal entry on December 31, 2012, to accrue the interest expense. Make the journal entry to record the interest payment on January 1, 2013. Compute the amount of cash which will be paid for the retirement of the bonds on the maturity date.