Question
On January 1, Year 1, Stopaz Co. issued 8%, five-year bonds with a face value of $200,000. The bonds pay interest semiannually on June 30
On January 1, Year 1, Stopaz Co. issued 8%, five-year bonds with a face value of $200,000. The bonds pay interest semiannually on June 30 and December 31 of each year. The bonds were issued when the market interest rate was 4% and the bond proceeds were $235,931. Stopaz uses the effective interest method for amortizing bond premiums/discounts and maintains separate general ledger accounts for each.
1.) Prepare the journal entry to record the issuance of the bonds on January 1, Year 1
2.) Prepare the journal entry to record the payment of interest on June 30, Year 1
3.) Calcuate the bonds interest expense accrual for the six months ended June 30, Year 2
4.) Calculate the premium amortized for the six months ended June 30, Year 2
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