LIABILITIES-1_1_ - st . Feb. 1 st Issuance of the bonds:...

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LIABILITIES Current Liabilities: A/P, N/P, accrued liabilities (Salaries/P, interest/P, dividends/P, income taxes/P, unearned revenues, and current portion of long-term debt. Long-Term Liabilities: Current obligations intended to be refinanced (intent and ability) L.T. N/P: bears interest (interest bearing and non-interest bearing notes) Allocating installment payments between interest and principal by using an amortization schedule. Bonds (B/P): promise to pay semiannual interest at stated interest rate (12%) and face (maturity) value (10,000) at maturity date. Assume semiannual interest payment dates are August 1 st and Febuary 1
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Unformatted text preview: st . Feb. 1 st Issuance of the bonds: Cash 10,000 B/P 10,000 Aug. 1 st Semiannual Interest Payments : Bond Interest Expense 600 Cash 600 Dec. 31 st End of Period Adjusting Entry : Bond Interst Expense 500 Interest Payable 500 Feb. 1 st Next Interest Payment after Adjusting Entry: Interest Expense 100 Interest Payable 500 Cash 600 Maturity Date: Bonds Payable 10,000 Cash 10,000 Bonds Issued In-Between Interest Payment Dates: New bondholder pays for the accrued interest since last interest payment date, allowing the issuer to pay full 6-months interest to each bondholder every interest payment date....
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This note was uploaded on 03/16/2012 for the course FENS 101 taught by Professor Selçukerdem during the Fall '12 term at Sabancı University.

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