On May 1 Steele Recreation Corporation issued 4 500 000

worth
On May 1, Steele Recreation Corporation issued $ 4,500,000 worth of 10-year, 8 percent
bonds, dated May 1, with interest payable on May 1 and November 1. The corporation’s fiscal
year is the calendar year. The following transactions pertain to the bond issue for the first two
years: Year 1 May 1 Sold the bond issue at 102. Nov. 1 Paid semiannual interest on the
bonds.Dec. 31 Deposited $ 80,250 in a bond sinking fund. 31 Recorded an adjusting entry for
amortization of bond premium. 31 Recorded an adjusting entry for accrued interest payable. 31
Closed the Interest Expense account. Year 2 Jan. 1 Reversed the adjusting entry for accrued
interest payable. 12 Bought various securities with sinking fund cash; cost, $ 80,250. May 1
Paid semiannual interest on the bonds. July 1 Recorded the receipt of $ 2,907 of income
derived from sinking fund investments, depositing the cash in the sinking fund. 2 Bought various
securities with sinking fund cash; cost, $ 2,907. Nov. 1 Paid semiannual interest on the bonds.
Dec. 31 Recorded the receipt of $ 3,249 of income derived from sinking fund investments,
depositing the cash in the sinking fund. 31 Deposited $ 101,500 in the bond sinking fund. 31
Recorded an adjusting entry for amortization of bond premium. 31 Recorded an adjusting entry
for accrued interest payable. 31 Closed the Sinking Fund Income account. 31 Closed the
Interest Expense account. Required 1. Record the transactions in general journal form using
pages 252– 254 of the general journal. 2. Post entries to the Premium on Bonds Payable
account, No. 243, and the Interest Expense account, No. 581. Label the appropriate entries in
the ledger accounts as adjusting, closing, or reversing.View Solution: On May 1 Steele
Recreation Corporation issued 4 500 000 worth
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