Problem 15-1A

On May 1, 2012, Chance Corp. issued $427,800, 9%, 5-year bonds at face value. The bonds were dated May 1, 2012, and pay interest semiannually on May 1 and November 1. Financial statements are prepared annually on December 31. (a) Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(b) Prepare the adjusting entry to record the accrual of interest on December 31, 2012. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(c) Show the balance sheet presentation on December 31, 2012. (For Bonds Payable, Notes Payable and Mortgage payable enter the account name only and do not provide any additional descriptive information e.g. due 2017.)

(d) Prepare the journal entry to record payment of interest on May 1, 2013, assuming no accrual of interest from January 1, 2013, to May 1, 2013. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(e) Prepare the journal entry to record payment of interest on November 1, 2013. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(f) Assume that on November 1, 2013, Chance calls the bonds at 104. Record the redemption of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)