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    Journal entries - bond transactions

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    January 1 Issued 10-year bonds payable of $1,000,000 at 98. The bonds have a stated interest rate of 6% and pay interest semi-annually on July 1 and January 1.
    July 1 Made first semi-annual interest payment to bondholders and amortized discount.
    December 31 Accrued interest and amortized discount.

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    Solution Preview

    The bonds are issued at 98, so the amount received is 1,000,000X.98 = 980,000. The balance amount of $20,000 is discount on bonds payable. The journal entry is
    Cash Dr 980,000
    Discount ...

    Solution Summary

    The solution explains the journal entries relating to bond transactions.