Lorence Corporation issued $610,000, 7%, 20-year bonds on January 1, 2017, for $550,109. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1. Lorence uses the effective-interest method to amortize bond premium or discount.

Prepare the journal entry to record the issuance of the bonds.

Prepare the journal entry to record the accrual of interest and the discount amortization on December 31, 2017.

Prepare the journal entry to record the payment of interest on January 1, 2018.

Transcribed Image Text:

Date Account Titles and Explanation Jan. 1 Debit Credit Date Account Titles and Explanation Dec. 31 Debit Credit Date Account Titles and Explanation Jan. 1 Debit Credit Date Account Titles and Explanation Jan. 1 Debit Credit Date Account Titles and Explanation Dec. 31 Debit Credit Date Account Titles and Explanation Jan. 1 Debit Credit

Answer rating: 100% (QA)

Journal entry Date account and explanation debit credit Jan 1 Cash 550... View the full answer