Question

On 1st Jan., 2015, PC Company sold 10% bonds having a maturity value of $400,000 for $ 453,681, which provides the bondholders with a 8% yield. The bonds are dated January 1st 2015, and mature January 1st 2024, with interest payable January 1st of each year.

Instructions:-

a) Prepare the journal entry at the date of the bond issuance.

b) Prepare a schedule of interest expense and bond amortization for 2015 2024.

c) Prepare the journal entry to record the interest payment and the amortization for 2015.

d) Prepare the journal entry to record the interest payment and the amortization for 2024.