Karen Austin Inc. has issued three types of debt on January 1, 2020, the start of the company’s fiscal year. For each debt below, prepare the 1/1/2020 and the 12/31/2020 journal entries.
A. $10 million, 10-year, 15% unsecured bonds, interest payable quarterly (end of the quarter). Bonds were priced to yield 12%.
B. $25 million par of 10-year, zero-coupon bonds at a price to yield 12% per year.
C. $20 million, 10-year, 10% mortgage bonds, interest payable annually to yield 12%. Assume interest is paid on 12/31.