In-class exercise 14-2:Bond discount/premium amortizationand interest accountingAjax issued $2,500,000 in bonds on January 1, 2014 at a stated rate of 4% and ayield of 5%. Interest is due on June 30th and December 31st of each year and thebond matures on December 31, 2015.1. Prepare a journal entry for the issuance of the bonds on January 1, 2014.2. Prepare a journal entry for the payment of interest on June 30, 2014.3. Prepare a journal entry for the retirement of the bonds at maturity.

Issue Price of the bonds = Present value of principal + Present value of interest payments = face…

Ajax issued $2,500,000 in bonds on January 1, 2014 at a stated rate of 4% and a yield of 5%. Interest is due on June 30th and December 31st of each bond matures on December 31, 2015. 1. Prepare a journal entry for the issuance of the bonds on January 1, 2014. 2. Prepare a journal entry for the payment of interest on June 30, 2014. 3. Prepare a journal entry for the retirement of the bonds at maturity. year and the

Ajax issued $2,500,000 in bonds on January 1, 2014 at a stated rate of 4% and a yield of 5%. Interest is due on June 30th and December 31st of each bond matures on December 31, 2015. 1. Prepare a journal entry for the issuance of the bonds on January 1, 2014. 2. Prepare a journal entry for the payment of interest on June 30, 2014. 3. Prepare a journal entry for the retirement of the bonds at maturity. year and the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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