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On February 1, 2018, Strauss-Lombardi issued 10% bonds, dated February 1, with a face amount of $720,000. The bonds sold for $662,232 and mature on
On February 1, 2018, Strauss-Lombardi issued 10% bonds, dated February 1, with a face amount of $720,000. The bonds sold for $662,232 and mature on January 31, 2038 (20 years). The market yield for bonds of similar risk and maturity was 11%. Interest is paid semiannually on July 31 and January 31. Strauss-Lombardi's fiscal year ends December 31. Required: 1. to 4. Prepare the journal entry to record their issuance by Strauss-Lombardi on February 1, 2018, interest on July 31, 2018 (at the effective rate), adjusting entry to accrue interest on December 31, 2018 and interest on January 31, 2019. (Do not round your intermediate calculations and round your final answers to nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete but not entirely correct. Credit No 1 Date General Journal February 01, 2018 Cash Discount on bonds payable Bonds payable Debit 662,232 57,768 720,000 2 July 31, 2018 36,423 Interest expense Cash Discount on bonds payable 36,000 423 3 December 31, 201 Interest expense 30,372 Interest payable Discount on bonds payable 30,000 372 6,078 X 30,000 January 31, 2019 Interest expense Interest payable Cash Discount on bonds payable 36,000 78
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