Journal Entries for Bond Transactions: Newby Corporation
Please explain how to create a journal entry for the attached
On May, 2008, Newby Corp. issued 600,000, 9%, 5-year bonds at face value. The bonds were dated may 1, 2008, and pay interest semiannually on May 1 and November 1. Financial statements are prepared annually on December 31.
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, 2008
c) Show the balance sheet presentation on December 31, 2008.
d) Prepare the journal entry to record payment of interest of May 1, 2009, assuming no accrual of interest from January 1, 2009 to May 1, 2009.
e) Prepare the journal entry to record payment of interest on November 1, 2009
f) Assume that on November 1, 2009, Newby calls the bonds at 102. record the redemption of the bonds.