Herron Corp
A. Journal entry
Dr Cash 600,000
Cr Bonds Payable 600,000
B. Adjusting entries as at Dec 31, 2015
Dr Interest Expense 9,000
Cr Interest Payable ($600,000 x 9% x 2/12) 9,000
C. Balance sheet as at December 31, 2015
Current liabilities
Interest Payable 9,000
Long term Liabilities
Bonds Payable 600,000
D. Journal entry as at May 1, 2016
Dr Interest Expense ($600,000 x 9% x 4/12) 18,000
Dr Interest Payable 9,000
Cr Cash 27,000
(e) Journal entry Nov 1, 2016
Dr Interest Expense 27,000
Cr Cash ($600,000 x 9% x 1/12) 27,000
F. Bonds at 102 on Nov 1,2016
Dr Bonds Payable 600,000
Dr Loss on Bond Redemption 12,000
Cr Cash ($600,000 x 1.02) 612,000
