Problem 14-9 Zero-coupon bonds [LO14-2]

On January 1, 2018, Darnell Window and Pane issued $19.2 million of 10-year, zero-coupon bonds for $6,761,942. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 2. Determine the effective rate of interest. 1. & 3. to 5. Prepare the necessary journal entries.

Complete this question by entering your answers in the tabs below.

• Interest rate
• General Journal

Determine the effective rate of interest.

Interest rate

%

• 1

  Record the issuance of the bonds.

• 2

  Record annual interest expense at December 31, 2018.

• 3

  Record annual interest expense at December 31, 2019.

• 4

  Record the payment at the bonds' maturity.