Ike issues $250,000 13% three-year bonds dated January 1, 2017, which pay interest semiannually on June 30 and December 31. They are issued at $256,156. Its market rate is 12% on the date of issuance.

1. Prepare the journal entry for January 1, 2017 to record the bond issue.

2. Complete the following table to calculate the total interest expense of the bonds that will be recognized over the life of the bonds.

Prepare an effective interest amortization table for the first two years of the bonds.

4. Prepare journal entries to record the first two interest payments.

5. Prepare the journal entry to record the withdrawal of the bonds on January 1, 2019, at 98.

Answer rating: 100% (QA)

1 The journal entry to record the bond issue on January 1 2017 is Cash 256156 Discount on bonds payable 6156 Bonds payable 250000 The discount on bond... View the full answer