Interest has accrued at 7% on the long-term notes payable since July 1, 2018. The next...

Interest has accrued at 7% on the long-term notes payable since July 1, 2018. The next six month interest payment at 6.9% on the bond is due on March 1, 2019. The original discount on bonds payable is $15,800. No portion of the discount has been amortized for any part of 2018; the bonds are 10-yr maturity (Use Straight-line). Notes Payable (LT) 1/1 Bal $43,000 7/1 Increased Mortgage CR $70,000 7/1 Bal $ $113,000 Discount on Bonds Payable 1/1 Bal $6400 What is the adjusting journal entry for this problem?

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Expert Solution

Adjusting Entry:

Working Notes:

Interest on $70,000 at 7% for 6 months = $2,450 ($70,000*7/100*6/12 months)

Interest on $43,000 at 6.9% for 4 months = $989 ($43,000*6.9/100*4/12 months)

Total interest = $3,439 ($2,450 + $989)

ekkarill92 answered 1 year ago

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