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On January 1 of Year 1, Lily Company issued a $20,000, 15% bond, at face value. Interest is paid annually each December 31, so the
On January 1 of Year 1, Lily Company issued a $20,000, 15% bond, at face value. Interest is paid annually each December 31, so the first coupon payment was made on December 31 of Year 1. This bond was retired on January 1 of Year 2, just one day after the first coupon payment was made. The total amount paid to retire this bond was $18,500. Lily uses the effective-interest method on its books. The journal entry to record the retirement of this bond would be?
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