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During Year 1 and Year 2, Agatha Corp. completed the following transactions relating to its...

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Accounting

During Year 1 and Year 2, Agatha Corp. completed the following transactions relating to its bond issue. The corporations fiscal year is the calendar year. Year 1

Jan. 1 Issued $330,000 of 8-year, 8 percent bonds for $324,000. The annual cash payment for interest is due on December 31.
Dec. 31 Recognized interest expense, including the straight-line amortization of the discount, and made the cash payment for interest.
Dec. 31 Closed the interest expense account.

Year 2

Dec. 31 Recognized interest expense, including the straight-line amortization of the discount, and made the cash payment for interest.
Dec. 31

Closed the interest expense account.

a) Prepare the general journal entries for the above transactions.

b) Prepare the liabilities section of the balance sheet at December 31, Year 1 and Year 2.

c) Determine the amount of interest expense that will be reported on the income statements for Year 1 and Year 2.

d) Determine the amount of interest that will be paid in cash to the bondholders in Year 1 and Year 2.

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