Presented below are two independent situations. 1. On January 1, 2008, Paul Simon Company issued $200,000 of

Question:

Presented below are two independent situations.

1. On January 1, 2008, Paul Simon Company issued $200,000 of 9%, 10-year bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1.

2. On January 1, 2008, Graceland Company issued $100,000 of 12%, 10-year bonds dated June 1 at par. Interest is payable semiannually on July 1 and January 1.

Instructions

For each of these two independent situations, prepare journal entries to record:

(a) The issuance of the bonds.

(b) The payment of interest on July 1.