I.On January 1, 2019, MUVE INC. issued $800,000, 6%, 5-year bonds for $735,110. The bonds were sold to yield an effective-interest rate of 8%. Interest is paid annually on January 1. The company uses the effective-interest method of amortization.

Instructions:

(a)Prepare a bond discount amortization schedule which shows the amortization of discount for the first two interest payment dates. (Round to the nearest dollar).

MAUVE INC.

Bond Discount Amortization

Effective-Interest MethodAnnual Interest Payments

6% Bonds Issued at 8%

Annual

InterestInterest toInterestDiscountUnamortizedCarrying Value

Periods be Paid ExpenseAmortizationDiscount of Bonds

Issue date

1.

2.

B. Prepare the journal entries that Mauve Inc. would make on January 1 and December 31, 2017 and January 1, 2018, related to the bond issue.(including explanations).

GENERAL JOURNAL J-1
	Account Title and Explanation	Ref	Debit	Credit
	Adjusting Entries