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    Newby Corporation Adjusting Journal Entries

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    P15-1A
    On May 1, 2010, Newby Corporation issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2010, 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, 2010.
    C). Show the balance sheet presentation on December 31, 2010.
    D). Prepare the journal entry to record the payment of interest on May 1, 2011, assuming no accrual of interest from January 1, 2011, to May 1, 2011.
    E). Prepare the journal entry to record the payment of interest on November 1, 2011.
    F). Assume that on November 1, 2011, Newby calls the bonds at 102. Record the redemption of the bonds.

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    Solution Summary

    P15-1A
    On May 1, 2010, Newby Corporation issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2010, 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, 2010.
    C). Show the balance sheet presentation on December 31, 2010.
    D). Prepare the journal entry to record the payment of interest on May 1, 2011, assuming no accrual of interest from January 1, 2011, to May 1, 2011.
    E). Prepare the journal entry to record the payment of interest on November 1, 2011.
    F). Assume that on November 1, 2011, Newby calls the bonds at 102. Record the redemption of the bonds.

    $2.49

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