Problem:
On January 1, Klosterman Company issued $426,000, 11%, 10-year bonds at face value. Interest is payable semiannually on July 1 and January 1.
Required:
Question 1: Prepare the journal entry to record the issuance of the bonds.
Question 2: Prepare the journal entry to record the payment of interest on July 1, assuming that interest was not accrued on June 30.
Question 3: Prepare the journal entry to record the accrual of interest on December 31
Note: Be sure to show how you arrived at your answer.