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On May 1 2013, Ezzy Company issued a 6-year bond worth $400,000 with an interest rate of 8% per annum. Interest is to be paid
On May 1 2013, Ezzy Company issued a 6-year bond worth $400,000 with an interest rate of 8% per annum. Interest is to be paid semi-annually on October 31 and April 30. At the time of the issuance, the market interest rate was 6%. Ezzy Company amortizes any premium or discount using the straight-line method. a) Prepare the journal entry on May 1, 2013, to issue the bonds. b) Redemption of the bond at fair value on May 1, 2018 (1 year before maturity).
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