Brief Exercise 9-56 Bonds Issued at a Discount (Effective Interest)

Crafty Corporation received $472,088 of cash upon issuance of 500 $1,000 par value bonds. Each bond has a stated rate of 5% and will mature on December 31, 2026, 7 years after the issuance of the bonds. Interest is paid annually on December 31. The market rate of interest is 6%.

Required:

Prepare the journal entry for December 31, 2022. If required, round amounts to the nearest whole dollar.

2022 Dec. 31			debit Credit
	(Record interest expense.)

Prepare the journal entry for December 31, 2023. If required, round amounts to the nearest whole dollar.

2023 Dec. 31			debit credit
	(Record interest expense.)