Problem

Two complete accounting cycles: bonds issued atface value with annual interestPolledo Comp...

Two complete accounting cycles: bonds issued atface value with annual interest

Polledo Company issued $350,000 of 20-year, 6 percent bonds on January 1, 2012. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Polledo immediately invested the proceeds from the bond issue in land. The land was leased for an annual $56,000 of cash revenue, which was collected on December 31 of each year, beginning December 31, 2012.

Required

a.Organize the transaction data in accounts under the accounting equation.


b. Prepare the income statement, balance sheet, and statement of cash flows for 2012 and 2013.

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