On January 1 of Year 1, Lily Company issued a $100,000, 16%, 10-year bond. Interest is...

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On January 1 of Year 1, Lily Company issued a $100,000, 16%, 10-year bond. Interest is paid semi-annually each June 30 and December 31, so the first contract interest payment was made on June 30 of Year 1 and the second contract interest payment was made on December 31 of Year 1. On the day the bond was issued, the annual market interest rate on bonds with the same degree of riskiness was 8%. Lily uses the effective-interest method on its books. Note: Round all calculations to the nearest dollar. The entry to record the FIRST contract interest payment on June 30 of Year 1 would include a CREDIT to Premium on Bonds of $6,173 DEBIT to Premium on Bonds of $6,173 CREDIT to Premium on Bonds of $1,827 CREDIT to Premium on Bonds of $1,900 DEBIT to Premium on Bonds of $1,827 DEBIT to Premium on Bonds of $1,900 CREDIT to Premium on Bonds of $6,100 DEBIT to Premium on Bonds of $6,100 On January 1 of Year 1, Lily Company issued a $100,000, 16%, 10-year bond. Interest is paid semi-annually each June 30 and December 31, so the first contract interest payment was made on June 30 of Year 1 and the second contract interest payment was made on December 31 of Year 1. On the day the bond was issued, the annual market interest rate on bonds with the same degree of riskiness was 8%. Lily uses the effective-interest method on its books. Note: Round all calculations to the nearest dollar. The entry to record the FIRST contract interest payment on June 30 of Year 1 would include a CREDIT to Premium on Bonds of $6,173 DEBIT to Premium on Bonds of $6,173 CREDIT to Premium on Bonds of $1,827 CREDIT to Premium on Bonds of $1,900 DEBIT to Premium on Bonds of $1,827 DEBIT to Premium on Bonds of $1,900 CREDIT to Premium on Bonds of $6,100 DEBIT to Premium on Bonds of $6,100

Answer rating: 100% (QA)

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