Question
On February 1, 2016, Strauss-Lombardi issued 11% bonds, dated February 1, with a face amount of $840,000. The bonds sold for $776,804 and mature on
On February 1, 2016, Strauss-Lombardi issued 11% bonds, dated February 1, with a face amount of $840,000. The bonds sold for $776,804 and mature on January 31, 2036 (20 years). The market yield for bonds of similar risk and maturity was 12%. Interest is paid semiannually on July 31 and January 31. Strauss-Lombardis fiscal year ends December 31. Required: 1. to 4. Prepare the journal entry to record their issuance by Strauss-Lombardi on February 1, 2016, interest on July 31, 2016 (at the effective rate), adjusting entry to accrue interest on December 31, 2016 and interest on January 31, 2017
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