At the end of 2017, Majors Furniture Company failed to accrue
$68,500 of interest expense that accrued during the last five
months of 2017 on bonds payable. The bonds mature in 2029. The
discount on the bonds is amortized by the straight-line method. The
following entry was recorded on February 1, 2018, when the
semiannual interest was paid:
Discount on bonds payable
1-a. Prepare any journal entry necessary to correct the error as well as the adjusting entry for 2018. (Ignore income taxes.)
1-b. Prepare journal entry that should have been recorded, if done correctly to start.
|Discount on bonds payable||2,250||(2,700 x 5/6)|
|Interest Payable||66,250||(79,500 x 5/6)|
|Discount on bonds payable||450||(2,700 x 1/6)|
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