Chapter 8
Non-Current Liabilities
394
AP-7A (
3
5
)
On February 1, 2016, Smart Water Inc. issued $500,000 worth of bonds with a 7% interest rate.
The bonds were issued at par. Interest is payable semi-annually on August 1 and February 1.
The bonds mature on February 1, 2026. Smart Water Inc. has a September 30 year-end.
Required
Prepare journal entries for the following.
a) the issuance of the bonds payable on February 1, 2016
b) the payment of interest on August 1, 2016
c) the required adjusting entry on September 30, 2016
d) the payment of interest on February 1, 2017
e) the maturity of the bond on February 1, 2026 assuming the interest has already been paid
Date
Account Title
Debit
Credit
