Master Corp. issued (5 %, $ 300,000) bonds on January 1, 2020. The bonds pay cash interest
Question:
Master Corp. issued \(5 \%, \$ 300,000\) bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1 and January 1, and were issued to yield \(6 \%\). The bonds mature January 1,2030, and the company uses the effective interest method to amortize bond discounts or premiums.
Required
a. Prepare journal entries on the following dates.
b. Answer part \(a\) assuming instead that the company uses the straight-line interest method to amortize discounts and premiums and the bonds were sold on March 1, 2020, for \(\$ 277,482\) (excluding accrued interest).
1. January 1,2020 -Issuance of bonds.
2. July 1,2020 -Interest payment.
3. December 31,2020 -Interest accrual.
4. January 1,2021 -Interest payment.
Step by Step Answer:
Intermediate Accounting Volume 2
ISBN: 9781618533135
2nd Edition
Authors: Hanlon, Hodder, Nelson, Roulstone, Dragoo