The long-term debt section of the Fleming Corporation's balance sheet at the end of its accounting LO 5 Journal Entries for Interest Payments Using the Effective Interest Method sells for 45. In addition, each game carries a warranty that provides for free replacement if it fails for any reason during the two years following the sale. In the past, 7 per cent of the games sold had to be replaced under the warranty. During July, Keystone sold 26,000 games and 2,800 games were replaced under the warranty.

1. Prepare a general journal entry to record the estimated liability for product warranties in July.

2. Prepare a general journal entry to record the games replaced under warranty during the month.

semiannual interest payment dates are March 1 and September 1. Because the market rate for similar investments was 11 per cent, the bonds had to be issued at a discount. The discount on the issuance of the bonds was 48,670 . The company's accounting year ends February 28 .

Prepare journal entries to record the bond issue on March 1,20.1; the payment of interest and the amortisation of the discount on September \(1,20 \times 1\); the accrual of interest and the amortisation of the discount on February 28, 20x2; and the payment of interest on March 1, 20x2. Use the effective interest method. (Round answers to the nearest whole number.)

Prepare the journal entries relevant to the interest payments on July 1, 20x2, December 31, \(20 \times 2\), and January \(1,20 \times 3\), using the effective interest method of amortisation. Assume an effective interest rate of 10 per cent.

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Long-Term Liabilities Bonds Payable 8%, interest payable 1/1 and 7/1, due 12/31/21x3 Less Unamortised Bond Discount 1,000,000 80,000 920,000