Chapter 14, Problem 14.15E

Error correction; accrued interest on bonds

• LO14–2

At the end of 2017, Majors Furniture Company failed to accrue $61,000 of interest expense that accrued during the last five months of 2017 on bonds payable. The bonds mature in 2031. The discount on the bonds is amortized by the straight-line method. The following entry was recorded on February 1, 2018, when the semiannual interest was paid:

Interest expense	73,200
Discount on bonds payable		1,200
Cash		72,000

Required:

Prepare any journal entry necessary to correct the errors as of February 2, 2018, when the errors were discovered. Also, prepare any adjusting entry at December 31, 2018, related to the situation described. (Ignore income taxes.)