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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.
Instructions
(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.

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