Grenier
Limited issued $300,000 of 10% bonds on January 1, 2011. The bonds are due on
January 1, 2016, with interest payable each July 1 and January 1. The bonds are
issued at face value. Prepare the company’s journal entries for
(a)
The January issuance,
(b)
The July 1, 2011 interest payment, and
(c)
The December 31, 2011 adjusting entry.
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(a)
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Cash ...............................................................................................
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300,000
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Bonds Payable...................................................................
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300,000
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(b)
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Interest
Expense.............................................................................
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15,000
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Cash ($300,000 X 10% X 6/12)........................................
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15,000
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(c)
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Interest
Expense.............................................................................
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15,000
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Interest Payable..................................................................
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15,000
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