Problem 15-6

How do I record serial bond transactions, and show financial reporting?

Houston Clothing Company issued $600,000 of 12% serial bonds on July 1, 2017, at face value. The bonds are dated July 1, 2017; call for semiannual interest payments on July 1 and January 1; and mature at the rate of $120,000 per year, with the first maturity date falling on July 1, 2018. The company's accounting period ends on September 30.

How do I prepare journal entries to record the interest payment of July 1, 2018; the maturing of $120,000 of bonds on July 1, 2018; and the adjusting entry needed on September 30,2018.

Also, how do I show how the bonds would be presented in the company's balance sheet for September 30, 2018.