The town of Liberty approved the construction of a special oven to cook the worlds...
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Accounting
The town of Liberty approved the construction of a special oven to cook the worlds largest apple pie, to be financed by 6% serial bonds. Interest is paid on Jan 1 and July 1 each year. Principal payments are made on Jan 1 each year. Any premium is amortized using straight-line over the 10-year life of the bonds. (Do not reduce for partial periods.)
Provide the fund and g-wide entries:
1. On May 1, Liberty issued $1,000,000 of the bonds at 104 plus accrued interest. Only the par value is authorized to be used for construction. All other funds raised must be used to service the debt.
2. On July 1, the semi-annual interest payment is made.
3. On Dec 31, adjusting entries are made.
What is the ending balance in:
Bonds Payable?
Premium on Bonds?
How much Interest Expense was recognized in the current year?
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