Question
On January 1st, 2020, General Electric (G.E.) issued $1 million of 25 year, 10% bonds when the market rate was 8%. The company uses the
On January 1st, 2020, General Electric (G.E.) issued $1 million of 25 year, 10% bonds when the market rate was 8%. The company uses the effective interest method to amortize any bond premium or discount. The bonds pay semiannual interest on July 1st and January 1st. The company has a November 30th year-end.
Prepare the journal entries to record the following transactions;
1.The issuance of the bonds on January 1, 2020.
2.The payment of interest on July 1, 2020.
3.Any required entries at November 30, 2020 the companys year end.
4.The payment of interest on January 1, 2021.
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