On July 1, 2010, Wheeler Satellites issued $4,500,000 face value, 9%, 10-year bonds at $4,219,600. This price resulted in an effective-interest rate of 10% on the bonds. Wheeler uses the effective-interest method to amortize bond premium or discount. The bonds pay semi-annual interest July 1 and January 1. Required: (d) Prepare the journal entry to record the payment of interest and the amortization of the discount on July 1, 2011, assuming that interest was not accrued on June 30. (e) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2011.
On July 1, 2010, Wheeler Satellites issued $4,500,000 face value, 9%, 10-year bonds at $4,219,600. This price resulted in an effective-interest rate of 10% on the bonds. Wheeler uses the effective-interest method to amortize bond premium or discount. The bonds pay semi-annual interest July 1 and January 1. Required: (d) Prepare the journal entry to record the payment of interest and the amortization of the discount on July 1, 2011, assuming that interest was not accrued on June 30. (e) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2011.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 15MCQ
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On July 1, 2010, Wheeler Satellites issued $4,500,000 face value, 9%, 10-year bonds at $4,219,600.
This price resulted in an effective-interest rate of 10% on the bonds. Wheeler uses the effective-interest method to amortize bond premium or discount. The bonds pay semi-annual interest July 1 and January 1.
Required:
(d) Prepare the
(e) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2011.
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