Correcting Error in Accounting for Bonds PayableOn June 30, 2020, Williams Inc. issued 8-year, $500,000, 5% bonds, priced at $412,608 to yield 8%, with cash interestpayable semiannually on June 30 and December 31. In 2021, after the financial statements had been issued, Williamsdiscovered that the entry to record interest expense on December 31, 2020, was recorded incorrectly as follows: debit toInterest Expense for $12,500 and a credit to Cash for $12,500.RequiredRecord the correcting entry in 2021, ignoring income taxes. Company policy is to amortize bond discounts or premiumsusing the effective interest method.Note: Round your answers to the nearest whole dollar.DateAccount NameDr.Cr.0.Jan. 1, 2021Check

On June 30, 2020, Williams Inc has issued 8 years bonds with the face value of $ 5,00,000 at 5%…

Answered: Required Record the correcting entry in…

Required Record the correcting entry in 2021, ignoring income taxes. Company policy is to amortize bond discounts or premiums using the effective interest method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Correcting Error in Accounting for Bonds Payable
On June 30, 2020, Williams Inc. issued 8-year, $500,000, 5% bonds, priced at $412,608 to yield 8%, with cash interest
payable semiannually on June 30 and December 31. In 2021, after the financial statements had been issued, Williams
discovered that the entry to record interest expense on December 31, 2020, was recorded incorrectly as follows: debit to
Interest Expense for $12,500 and a credit to Cash for $12,500.
Required
Record the correcting entry in 2021, ignoring income taxes. Company policy is to amortize bond discounts or premiums
using the effective interest method.
Note: Round your answers to the nearest whole dollar.
Date
Account Name
Dr.
Cr.
0.
Jan. 1, 2021
Check

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