Question

1. ABC Company signed a $600,000, 12% note payable on January 1, 2014. The note is...

1. ABC Company signed a $600,000, 12% note payable on January 1, 2014. The note is due January 1, 2020, with interest payable each July 1 and January 1. The note was issued at face value. Prepare Lucas Co’s journal entries for (a) the January note proceeds, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.

1/1/2014

7/1/2014

12/31/2014

2. Sims Company issued $850,000 of 10% bonds on January 1, 2014. The bonds are due January 1, 2024, with interest payable each July 1 and January 1. The bonds were issued at 101.

Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Sims Company records straight-line amortization semiannually.

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