Question six: $(5$ marks$)$

On January $1,2022,$ Kirmer Corp. purchased $450,000$ of $6\%$ bonds, interest payable on January $1$ and July $1,$ for $428,800($a $7\%$ effective interest rate$).$ The bonds mature on January $1,2028.$ Record amortization and interest revenue on the appropriate dates by the effective$-$interest method $($round to the nearest dollar$).($Assume bonds are non$-$trading.$)$

Instructions

$($a$)$ Prepare the entry for January $1,2022.$

$($b$)$ The bonds are sold on October $1,2022$ for $427,000$ plus accrued interest. Prepare all entries required to properly record the sale.

Solution