question at the end of 2015 majors furniture company failed to accrue 70 500 of inte 4305410

question at the end of 2015 majors furniture company failed to accrue 70 500 of inte 4305410

Question

At the end of 2015, Majors Furniture Company failed to accrue$70,500 of interest expense that accrued during the last fivemonths of 2015 on bonds payable. The bonds mature in 2027. Thediscount on the bonds is amortized by the straight-line method. Thefollowing entry was recorded on February 1, 2016, when thesemiannual interest was paid:

Interest expense      84,600

     Discount on bonds payable3,100

    Cash                                  81,500

Required:

1)   Prepare any journal entry necessary to correctthe error as well as any adjusting entry for 2016 related to thesituation described. (Ignore income taxes.) (Do not roundintermediate calculations and round your final answers to nearestwhole dollar amount. If no entry is required for atransaction/event, select “No journal entry required” in the firstaccount field.)

2)    Prepare journal entry that should have beenrecorded, if done correctly to start. (Do not round intermediatecalculations and round your final answers to nearest whole dollaramount. If no entry is required for a transaction/event, select “Nojournal entry required” in the first account field.)

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