Question
100000 bond with a stated rate of 10% and effective rate of 12% that pays internet semi-annually and has maturity for 3 years. Semi annual
100000 bond with a stated rate of 10% and effective rate of 12% that pays internet semi-annually and has maturity for 3 years. Semi annual interest payments made in July 1 of current year and January 1 of the following year. Using effective rate method
I know the initial entry is
Jan 1 Cash 95082
Discount on bonds payable 4918
Bonds payable 100000
and recording the entries
July 1 Bond interest expense 5705
Discount on bonds payable 705
Cash 5000
Dec.31 Bond interest expense 5747
Discount on bonds payable 747
Bond interest payable 5000
My question is the entry for the next year on Jan 1
Jan. 1 Bond interest payable 5000
?
Cash 5000?
Jan. 1 Bond Interest expense 5792
Discount on bonds payable 792
Cash 5000
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