Question
ABC Company sold $1,000,000 of 5% bonds with interest due semi-annually at a market rate of 6%.They are 5 year bonds. This sale occurred January
ABC Company sold $1,000,000 of 5% bonds with interest due semi-annually at a market rate of 6%.They are 5 year bonds. This sale occurred January 1, 2019.
a. Provide an amortization schedule using the effective interest rate method for the entire life of the bond.
b.Show the journal entry for the January sale.
c.Show the journal entry for the first interest payment date.
NOTE:A good search term for finding examples is "effective interest rate method example" and "bond issuance price"
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Accounting Principles
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
9th Edition
978-0470317549, 9780470387085, 047031754X, 470387084, 978-0470533475
