Question
On January 1, 2015, Lock Industries Ltd. issued $100,000 face value, 9%, 5-year bonds at $89,185.67 This price resulted in an effective interest rate of
On January 1, 2015, Lock Industries Ltd. issued $100,000 face value, 9%, 5-year bonds at $89,185.67 This price resulted in an effective interest rate of 12% on the bonds. Lock uses the effective interest method to amortize bond discount. The bonds pay semi-annually interest 1/7 - 1/1.
1- Prepare the journal entry to record the issuance of the bonds on January 1, 2015.
2- Prepare an amortization table through December 31, 2019 for this bond issue.
3- Prepare the journal entry to record the accrual of interest and the amortization of the discount through December 31, 2019.
Note: The bonds pay semi-annually interest 1/7 - 1/1
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