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On January 1st, 2017, ABC company issued 3 years $400,000, 10% bonds at 105. The interest is paid annually on December 31st each year. These

On January 1st, 2017, ABC company issued 3 years $400,000, 10% bonds at 105. The interest is paid annually on December 31st each year. These bonds were issued to yield 8%. The company prepares its financial statements semiannually on June 30 and December 31st each year, and uses the effective interest method.

Required:

  1. Compute the issue price of the bonds.
  2. Prepare the journal entries for the issuance on January 1st 2017.
  3. Construct the bond amortization table for the first 2 years.
  4. Prepare the journal entries on June 30, 2017, December 31st , 2017,

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