Woode Corporation issued $400,000, 7%, 20-year bonds on January 1, 2017, for $360,727. This price resulted in

Question:

Woode Corporation issued $400,000, 7%, 20-year bonds on January 1, 2017, for $360,727. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1. Woode uses the effective-interest method to amortize bond premium or discount.

Instructions

Prepare the journal entries to record (round to the nearest dollar):

(a) The issuance of the bonds.

(b) The accrual of interest and the discount amortization on December 31, 2017.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...