On February 1, 2021, Strauss-Lombardi issued 9% bonds, dated February 1, with a face amount of $800,000. The bonds sold for $731,364 and mature on January 31, 2041 (20 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. Strauss-Lombardi’s fiscal year ends December 31.Required:1. Prepare the journal entry to record their issuance by Strauss-Lombardi on February 1, 2021.2. Prepare the journal entry to record interest on July 31, 2021 (at the effective rate).3. Prepare the adjusting entry to accrue interest on December 31, 2021.4. Prepare the journal entry to record interest on January 31, 2022.
On February 1, 2021, Strauss-Lombardi issued 9% bonds, dated February 1, with a face amount of $800,000. The bonds sold for $731,364 and mature on January 31, 2041 (20 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. Strauss-Lombardi’s fiscal year ends December 31.Required:1. Prepare the journal entry to record their issuance by Strauss-Lombardi on February 1, 2021.2. Prepare the journal entry to record interest on July 31, 2021 (at the effective rate).3. Prepare the adjusting entry to accrue interest on December 31, 2021.4. Prepare the journal entry to record interest on January 31, 2022.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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On February 1, 2021, Strauss-Lombardi issued 9% bonds, dated February 1, with a face amount of $800,000. The bonds sold for $731,364 and mature on January 31, 2041 (20 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. Strauss-Lombardi’s fiscal year ends December 31.
Required:
1. Prepare the
2. Prepare the journal entry to record interest on July 31, 2021 (at the effective rate).
3. Prepare the
4. Prepare the journal entry to record interest on January 31, 2022.
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