1. Benson Industries issue $2,000,000 of 8%, 5 year, debentures on May 1, 2020. Similar bonds yield 10% interest. The bonds pay interest semiannually on May 1 and November 1. Bond issue costs were $28,000. Benson uses the effective interest method of amortizing discounts and premiums and the straightline method for amortizing bond issue costs.

a. Prepare the journal entry to record the issue of the bonds on May 1, 2020.

b. Prepare the journal entry to record the first payment of interest on November 1, 2020.

c. Prepare the journal entry to record the adjusting entry, if any, at December 31, 2020.

d. Prepare the journal entry to record the second payment of interest on May 1, 2021.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The Present Value of Bond based on Discount rate of 10 effective yield comes out to 18455... View the full answer