Holloway issued 8%, 10-year bonds with a of $2,000,000 at a price of 96 on July 1, 2018. The bonds pay interest each January 1 and July 1. Holloway uses the straight-line amortization method for all bond premiums and discounts. The company has a fiscal year-end of December 31.
Requirements
1. Record the issuance of the bonds on July 1, 2018.
2. Record the accrual for the cash interest payable on the bonds and the amortization of any premium or discount on the bonds on December 31, 2018.
3. Show how the accounts related to the bonds issued on July 1, 2018, would be reported on Holloway’s as of December 31, 2018.
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