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LRNA Company issued $300,000, 11%, 10-year bonds on January 1, 2014, for $318,694. This price resulted in an effective-interest rate

Question:

LRNA Company issued $300,000, 11%, 10-year bonds on January 1, 2014, for $318,694. This price resulted in an effective-interest rate of 10% on the bonds. Interest is payable semiannually on July 1 and January 1. LRNA uses the effective-interest method to amortize bond premium or discount.

Instructions

Prepare the journal entries to record the following. (Round to the nearest dollar.)

(a) The issuance of the bonds.

(b) The payment of interest and the premium amortization on July 1, 2014, assuming that interest was not accrued on June 30.

(c) The accrual of interest and the premium amortization on December 31, 2014.

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a Jan 1 Cash 318 694 Premium on Bonds Payable 18 694 Bonds …View the full answer


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Irfan Ali
I have a first class Accounting and Finance degree from a top university in the World. With 5+ years experience which spans mainly from the not for profit sector, I also have vast experience in preparing a full set of accounts for start-ups and small and medium-sized businesses. My name is Irfan Ali and I am seeking a wide range of opportunities ranging from bookkeeping, tax planning, business analysis, Content Writing, Statistic, Research Writing, financial accounting, and reporting.
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Related Book For  answer-question
Accounting Principles

Accounting Principles

ISBN: 9781118566671

11th Edition

Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso

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Question Details
Chapter # 15
Section: Exercises
Problem: 17
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Question Posted: January 30, 2014 02:03:18
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