A ten-year bond has a face value of $10,000, a face interest rate of 11 percent, issued at $10,400. The effective interest rate at the time of issue was 10 percent. The bonds were on one of its semi-annual interest payment dates. Show journal entries to:

(a) record the issue of the bonds and 

(b) bond interest expense on the first and second semi-annual interest payment date. (assuming the effective interest method of amortization),

(c) The entry required on maturity to pay off the bonds.

Answer rating: 100% (QA)

a To record the issue of the bonds Debit Cash 10400 Credit Bonds Payable 10000 Credit Premium on Bon... View the full answer