Question
On January 1, 2016, the Diamond Association issued bonds with a face value of $207,000, a stated rate of interest of 6 percent, and a
On January 1, 2016, the Diamond Association issued bonds with a face value of $207,000, a stated rate of interest of 6 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 8 percent at the time the bonds were issued. The bonds sold for $179,220. Diamond used the effective interest rate method to amortize the bond discount.
a. | Determine the amount of the discount on the day of issue. |
b. | Determine the amount of interest expense recognized on December 31, 2016.
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d. | Provide the general journal entry necessary to record the December 31, 2016, interest expense. |
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