Question 3 On December 31, 2022, Potter Corporation issued €2,000,000, 6%, 5-year bonds for €1,837,750. The bonds were sold to yield an effective-interest rate (= market interest rate) of 8%. Interest is paid annually on December 31. The company uses the effective-interest method of amortization. Instructions (a) Prepare a bond discount amortization schedule which shows the amortization of discount for the first two interest payment dates (Round to the nearest dollar.) (b) Prepare the journal entries that Potter Corporation would make on December 31, 2022, and December 31, 2023, and December 31, 2024 related to the bond issue.

Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
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Chapter10: Long-term Liabilities
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Sub-Accounting

Question 3
On December 31, 2022, Potter Corporation issued €2,000,000, 6%, 5-year bonds for €1,837,750.
The bonds were sold to yield an effective-interest rate (= market interest rate) of 8%. Interest is
paid annually on December 31. The company uses the effective-interest method of amortization.
Instructions
(a) Prepare a bond discount amortization schedule which shows the amortization of discount
for the first two interest payment dates (Round to the nearest dollar.)
(b) Prepare the journal entries that Potter Corporation would make on December 31, 2022, and
December 31, 2023, and December 31, 2024 related to the bond issue.
Transcribed Image Text:Question 3 On December 31, 2022, Potter Corporation issued €2,000,000, 6%, 5-year bonds for €1,837,750. The bonds were sold to yield an effective-interest rate (= market interest rate) of 8%. Interest is paid annually on December 31. The company uses the effective-interest method of amortization. Instructions (a) Prepare a bond discount amortization schedule which shows the amortization of discount for the first two interest payment dates (Round to the nearest dollar.) (b) Prepare the journal entries that Potter Corporation would make on December 31, 2022, and December 31, 2023, and December 31, 2024 related to the bond issue.
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