Wright Industries needs to raise capital for a factory expansion. The board of directors has just concluded negotiations with an underwriter to issue $2,500,000 of 8%, 15-year callable bonds dated June 30, 2020, with interest payment dates of December 31 and June 30. The bonds are issued on June 30, 2020, at 102.5 when market rate is at 7.5%. Wright's year-end is December 31 and effective interest rate amortization is to be used. Prepare (1) the sales entry of this bond at June 30 2020 (6 marks) and (2) the first bond interest payment entry at Dec 31, 2020 using effective-interest method of amortization

Answer rating: 100% (QA)

1 The bonds are issued at price higher than its par value and thus th... View the full answer