Question
Problem 15-6A On July 1, 2014, Kellerman company issued $3,675,300, 12%. 10 year bonds at $3,285,941. This price resulted in an effective-interest rate of 14%
Problem 15-6A
On July 1, 2014, Kellerman company issued $3,675,300, 12%. 10 year bonds at $3,285,941. This price resulted in an effective-interest rate of 14% on the bonds. Kellerman uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest July 1 and January 1.
a. Prepare the journal entries to record the following transactions.(Round to 0 decimal places, e.g. 15.250).
(1) The issuance of the bonds on July 1, 2014.
(2) The accrual of interest and the amortization of the discount on december 31, 2014.
(3) The payment of interest and the amortization of the discount on July 1, 2015, assuming no accrual of interest on June 30.
(4) The accrual of interest and the amortization of the discount on December 31, 2015.
b. Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2015, balance sheet.
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