A company issues $20,000,000, 8%, 20-year bonds to yield (mkt) 6% on January 1, 2020. Interest is paid on June 30 and December 31. The bond is valued at $21,400,000. A. Record the issuance of the long-term bond as well as the first two interest payments using the effective interest method.

A company issues $20,000,000, 8%, 20-year bonds to yield (mkt) 6% on January 1, 2020. Interest is paid on June 30 and December 31. The bond is valued at $21,400,000. A. Record the issuance of the long-term bond as well as the first two interest payments using the effective interest method.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 6MC: On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest...

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Question

A company issues $20,000,000, 8%, 20-year bonds to yield (mkt) 6% on January 1, 2020. Interest is paid on June 30 and December 31. The bond is valued at $21,400,000.

A. Record the issuance of the long-term bond as well as the first two interest payments using the effective interest method.

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