E10-20 (Algo) Recording and Reporting a Bond Issued at a Discount (Straight-Line Amortization with Discount Account) LO10-4

On January 1 of this year, Clearwater Corporation sold bonds with a face value of $757,000 and a coupon rate of 7 percent. The bonds mature in 10 years and pay interest annually every December 31. Clearwater uses the straight-line amortization method and also uses a discount account. Assume an annual market rate of interest of 8 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answers to whole dollars.)

Required:

1.&2. Prepare the journal entry to record the issuance of the bonds and the interest payment on December 31 of this year.

3. How will the bonds be reported on Clearwater's December 31 Balance Sheet?

Journal entry worksheet

• 1.Record the issuance of the bonds.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
January 01

• 2.Record the interest payment on December 31, using straight-line amortization.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
December 31