Pluto Company issued $300,000 of 20-year, 6 percent bonds on January 1, Year 1. The bonds were
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Pluto Company issued $300,000 of 20-year, 6 percent bonds on January 1, Year 1. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Pluto immediately invested the proceeds from the bond issue in land. The land was leased for an annual $50,000 of cash revenue, which was collected on December 31 of each year, beginning December 31, Year 1.
Required
a. Organize the transaction data in accounts under the accounting equation for Year 1 and Year 2.
b. Prepare the income statement, balance sheet, and statement of cash flows for Year 1 and Year 2.
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Related Book For
Introductory Financial Accounting for Business
ISBN: 978-1260299441
1st edition
Authors: Thomas Edmonds, Christopher Edmonds
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