Burr Motor Company, a manufacturer of small- to medium-sized electric motors, needs additional funds to market a revolutionary new motor. Burr has arranged for private placement of a $50,000, 5-year, 11% bond issue. Interest on these bonds is paid annually each year on August 31. The issue was dated and sold on September 1, 2018, for proceeds of $48,197.61 to yield 12%. Burr Motor Company has December 31 fiscal year-end. Prepare journal entries to record the issurance of the bonds and the interest entries for 2019 and 2020 using a) the effective interest method and b) the straight-line method. Prepare journal entries to record the issuance of the bonds and the interest entries for 2019 and 2020 using (a) the effective interest method and (b) the straight-line method.
Burr Motor Company, a manufacturer of small- to medium-sized electric motors, needs additional funds to market a revolutionary new motor. Burr has arranged for private placement of a $50,000, 5-year, 11% bond issue. Interest on these bonds is paid annually each year on August 31. The issue was dated and sold on September 1, 2018, for proceeds of $48,197.61 to yield 12%. Burr Motor Company has December 31 fiscal year-end. Prepare journal entries to record the issurance of the bonds and the interest entries for 2019 and 2020 using a) the effective interest method and b) the straight-line method. Prepare journal entries to record the issuance of the bonds and the interest entries for 2019 and 2020 using (a) the effective interest method and (b) the straight-line method.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 11E
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Burr Motor Company, a manufacturer of small- to medium-sized electric motors, needs additional funds to market a revolutionary new motor. Burr has arranged for private placement of a $50,000, 5-year, 11% bond issue. Interest on these bonds is paid annually each year on August 31. The issue was dated and sold on September 1, 2018, for proceeds of $48,197.61 to yield 12%. Burr Motor Company has December 31 fiscal year-end. Prepare
Prepare journal entries to record the issuance of the bonds and the interest entries for 2019 and 2020 using (a) the effective interest method and (b) the straight-line method. |
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