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III. Bonds Payable issue and amortization       Carson Company issued $1,000,000 of corporate bonds on January...

III. Bonds Payable issue and amortization

      Carson Company issued $1,000,000 of corporate bonds on January 1, 2016. The bonds have a stated rate of 4 percent, and a 10 year life. The bonds were issued to yield 3 percent. The bonds pay interest annually, each December 31, starting December 31, 2016.

IV. Refer back to the information in Part III. Assume that Carson’s year end financial statement date is March 31, 2016.

A. Prepare the adjusting journal entry at March 31, 2016, to record the accrual of interest and related amortization.

B. Prepare the journal entry to pay the first interest payment on December 31, assuming reversing journal entries were posted at the beginning of the new year (April 1, 2016).

C. Prepare the journal entry to pay the first interest payment on December 31, assuming NO reversing journal entries were posted at the beginning of the new year (April 1, 2016).

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