Question
On January 1, 2022, ABC issued bonds with a nominal rate of 12% dated January 1, 2022, with a principal of $5,000,000. The bonds mature
On January 1, 2022, ABC issued bonds with a nominal rate of 12% dated January 1, 2022, with a principal of $5,000,000. The bonds mature on January 1, 2032. The effective interest rate is 14%. Interest is paid annually on January 1 of each year beginning 1/1/23. The company closes its books on December 31 of each year.
Required:
1. Prepare the entry to record the bond issue on January 1, 2022.
2. Prepare the entry to record the interest expense for 2022, using the effective interest method.
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Intermediate Accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
10th edition
1260481956, 1260310175, 978-1260481952
