The following in taken from the Magana Corp statement of financial position.MAGANA CORPORATIONStatement of Financial Position (partial)December 31, 2011Non-current liabilities Bonds payable, 7% due January 1, 2022 ……. $2,310,000Current liabilities Bond interest payable (for 6 month from July 1 to December 31) ………… $ 84,000Interest is payable semiannually on January 1 and July 1. The bonds are callable on any semiannual interest date. Magana uses straight-line amortization for any bond premium or discount. From December 31, 2011, the bonds will be outstanding for an additional 10 years (120 months).Instructions(Round at computation to the nearest euro)(a) Journalize the payment of bond interest on January 1, 2012.(b) Prepare the entry to amortize bond discount and to pay the interest due on July 1, 2012, assuming that interest was not accrued on June 30.(c) Assume that on July 1, 2012, after paying interest. Magana Corp. calls bonds having a face value of $800,000. The call price is 101. Record the redemption of the bonds.(d) Prepare the adjusting entry at December 31, 2012, to amortize bond discount and to accrue interest on the remaining bonds.View Solution:
The following in taken from the Magana Corp statement of