Question: Issue bonds and pay interest - effective interest method 3 journal entries 1/1/2022 Montvale Corp. issued bonds payable that will be due in 10 years.

Issue bonds and pay interest - effective interest method

3 journal entries

1/1/2022 Montvale Corp. issued bonds payable that will be due in 10 years.

Face value of bonds 700,000

Stated interest rate 6%

Proceeds of bond issue 666,633

The company uses the effective interest method of amortization.

Interest payment dates July 1 January 1 Effective interest rate 7%

INSTRUCTIONS: Prepare the journal entry to issue the bonds.

Prepare the journal entries related to interest payments for the year.

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