On May 1, 2011, Newby Corp. issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2011, and pay interest semi-annually on May 1 and November 1. Financial statements are prepared annually on December 31.
Required:
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, 2011.
C. Show the balance sheet presentation on December 31, 2011.
D. Prepare the journal entry to record payment of interest on May 1, 2012, assuming no accrual of interest frrom January 1, 2012, to May 1, 2012.
E. Prepare the journal entry to record payment of interest on November 1, 2012.
F. Assume that on November 1, 2012, Newby calls the bonds at 102. Record the redemption of the bonds.