On January 1 of this year, Clearwater Corporation sold bonds with a face value of $766,000 and
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Question:
On January 1 of this year, Clearwater Corporation sold bonds with a face value of $766,000 and a coupon rate of 7 percent. The bonds mature in 10 years and pay interest annually every December 31. Clearwater uses the straight-line amortization method and also uses a discount account. Assume an annual market rate of interest of 8 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
Note: Use appropriate factor(s) from the tables provided.
Required:
1.&2. Prepare the journal entry to record the issuance of the bonds and the interest payment on December 31 of this year.
3. What bonds payable amount will Clearwater report on its December 31 balance sheet?
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