Problemon october 1 2016 kristal corp issued 700000 5, Ask an Expert

Accounting

Problem

On October 1, 2016, Kristal Corp. issued $700,000, 5%, 10-year bonds at face value. The bonds were dated October 1, 2016, and pay interest annually on October 1. Financial statements are prepared annually on December 31.

Instructions

(a) Prepare the journal entry to record the issuance of the bonds.

(b) Prepare the adjusting entry to record the accrual of interest on December 31, 2016.

(d) Prepare the journal entry to record the payment of interest on October 1, 2017.

(e) Prepare the adjusting entry to record the accrual of interest on December 31, 2017.

(f) Assume that on January 1, 2018, Kristal pays the accrued bond interest and calls the bonds. The call price is 104. Record the payment of interest and redemption of the bonds.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92770373

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