Stevens Corporation issued $700,000 of 9% bonds on May 1, 2012

Stevens Corporation issued $700,000 of 9% bonds on May 1, 2012. The bonds were dated January 1, 2012, and mature on January 1, 2017, with interest payable each July 1 and January 1. The bonds were issued at face value plus accrued interest. Prepare the company’s journal entries for

(a) The May 1 issuance,

(b) The July 1 interest payment, and

(c) The December 31 adjusting entry.

(a)	Cash  ...............................................................................................	721,000
	Bonds Payable...................................................................		700,000
	Interest Expense.................................................................		21,000
	($700,000 X 9% X 4/12 = $21,000)
(b)	Interest Expense.............................................................................	31,500
	Cash ....................................................................................		31,500
	($700,000 X 9% X 6/12 = $31,500)
(c)	Interest Expense.............................................................................	31,500
	Interest Payable..................................................................		31,500