Question
On January 1, 2019, Kelly Corporation acquired bonds with a face value of $700,000 for $677,829.11, a price that yields a 11% effective annual interest
On January 1, 2019, Kelly Corporation acquired bonds with a face value of $700,000 for $677,829.11, a price that yields a 11% effective annual interest rate. The bonds carry a 10% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2022, and are being held to maturity.
Required:
| Prepare journal entries to record the purchase of the bonds and the first two interest receipts using the: |
| a. | straight-line method of amortization |
| b. | effective interest method of amortization |
a. Prepare journal entries to record the purchase of the bonds on January 1 and the first two interest receipts on June 30 and December 31 using the straight-line method of amortization.
PAGE 1
GENERAL JOURNAL
| DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | |
|---|---|---|---|---|---|
b. Prepare journal entries to record the purchase of the bonds on January 1 and the first two interest receipts on June 30 and December 31 using the effective interest method of amortization.
GENERAL JOURNAL
| DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | |
|---|---|---|---|---|---|
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Quality Auditing A Tool For Excellence
Authors: David Mills, J. Mills
1st Edition
041245890X, 978-0412458903
