Moriarity Company sold ($ 4,000,000,9 %, 20)-year bonds on January 1, 1996. The bonds were dated January

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Moriarity Company sold \(\$ 4,000,000,9 \%, 20\)-year bonds on January 1, 1996. The bonds were dated January 1, 1996, and pay interest on January 1 and July 1. Moriarity Company uses the straight-line method to amortize bond premium or discount. The bonds were sold at 97. Assume no interest is accrued on June 30.

\section*{Instructions}

(a) Prepare the journal entry to record the issuance of the bonds on January 1, 1996.

(b) Prepare a bond discount amortization schedule for the first four interest periods

(c) Prepare the journal entries for interest and the amortization of the discount in 1996 and 1997.

(d) Show the balance sheet presentation of the bond liability at December 31, 1997.

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Financial Accounting

ISBN: 9780471169208

2nd Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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