Sicily Corporation issued $450,000 in 8% bonds (payable on December 31, 2029) on January 1, 2020, for $418,500. Interest is paid on June 30 and December 31. The market rate of interest is 9%.

Required:

Prepare the journal entries for December 31, 2020 and 2021. Round amounts to the nearest whole dollar.

Bonds Issued at a Discount (Effective Interest) Sicily Corporation issued $450,000 in 8% bonds (payable on December 31, 2029) on January 1, 2020, for $418,500. Interest is paid on June 30 and December 31. The market rate of interest is 9%. Required Prepare the journal entries for December 31, 2020 and 2021. Round amounts to the nearest whole dollar. Dec. 31, 2020 Interest Expense 18,833X Discount on Bonds Payable Cash 833 X 18,000 | Dec. 31, 2021 Interest Expense v 18,870 X Discount on Bonds Payable 870 X Cash 18,000