On January 1, 2022, ABC issued 12% nominal rate bonds dated January 1, 2022, with principal of $5,000,000. The bonds mature on January 1, 2032. The effective interest rate is 14%. Interest is paid annually on January 1 of each year beginning 1/1/23. The company closes books on December 31 of each year.

Required:

1. Prepare the entry to record the bond issue on January 1, 2022.

2. Prepare the entry to record the 2022 interest expense, using the effective interest method.

Answer rating: 100% (QA)

1 Journal entry to record the bond issue on January 1 2022 Date January 1 2022 Cash Ac Dr 5000000 To ... View the full answer