Response to the following problem:
The board of directors of Galary Production Company authorizes the issuance of $8 million of 7%, 10-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on June 30, 20X5, at par plus accrued interest.
Required:
1. Journalize the following transactions:
a. Issuance of the bonds on August 31, 20X5.
b. Payment of interest on November 30, 20X5.
c. Accrual of interest on December 31, 20X5.
d. Payment of interest on May 31, 20X6.
2. Report interest payable and bonds payable as they would appear on the Galaxy balance sheet at December 31, 20X5.