On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. Prepare entries to record the following transactions for the current fiscal year.
Required:
A) Issuance of the bonds on January 1. Refer to the Chart of Accounts for exact wording of account titles. This Jounral should have 3 rows, be sure to include correct dates as well.
B) Second semiannual interest payment on December 31. Refer to the Chart of Accounts for exact wording of account titles. This Journal should have 2 rows, be sure to include correct dates as well.
C) Amortization of bond discount/premium, using the straight-line method of amortization, on July 1. Refer to the Chart of Accounts for exact wording of account titles. This Journal should have 2 rows, be sure to include correct dates as well.
Chart of Accounts.
ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable
113 Allowance for Doubtful Accounts
114 Notes Receivable
115 Interest Receivable
121 Merchandise Inventory
122 Supplies
131 Prepaid Insurance
140 Land
151 Building
152 Accumulated Depreciation-Building
153 Equipment
154 Accumulated Depreciation-Equipment
LIABILITIES
210 Accounts Payable
221 Salaries Payable
231 Sales Tax Payable
241 Notes Payable
242 Interest Payable
251 Bonds Payable
252 Discount on Bonds Payable
253 Premium on Bonds Payable
EQUITY
310 Maria Duarte, Capital
311 Maria Duarte, Drawing
312 Income Summary
REVENUE
410 Sales
610 Interest Revenue
611 Gain on Redemption of Bonds
EXPENSES
510 Cost of Merchandise Sold
511 Bad Debt Expense
512 Credit Card Expense
513 Cash Short and Over
521 Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
534 Rent Expense
535 Insurance Expense
536 Supplies Expense
551 Depreciation Expense-Building
552 Depreciation Expense-Equipment
590 Miscellaneous Expense
710 Interest Expense
711 Loss on Redemption of Bonds