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Prepare the adjusting journal entry required at december

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Question - On Jan. 1, 2017, the City of Phoenix issues a $2,000,000 10-year bond with a 5.25% contractual interest rate, to be paid annually, for the construction of a cross-town freeway. It was issued for $2,038,609 when the market rate was 5%. Interest payments made on January 1st. The entry to issue the bond was

Cash 2,038,609

Bond Payable 2,000,000

Bond Premium 38,609

You must do the following bond related journal entries. Be sure to note which one is a. and b. for grading purposes.

Required -

a. Prepare the adjusting journal entry required at December 31, 2017 to accrue interest.

b. Prepare the journal entry required to pay interest on January 1, 2018.

Reference no: EM133120912

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