Bond issue
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On April 1, 20x7, a corporation issued $3,000,000, 8%, 10 year bonds at $95. The bonds pay interest each October 1 and April 1 and the corporation uses the straight line method to amortize premium or discount. Please, prepare entries for the issue of the bonds, for the first interest payment and for the adjusting (three entries) entry on December 31.
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Solution Summary
The solution explains the journal entries for bond issuance and interest payments.
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The bonds are issued for 3,000,000 X .95 = 2,850,000. The bond discount is 150,000. The total periods are 10X2=20. Under straight line method the bond discount amortization per period is 150,000/20 = $7,500.
The entries ...
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