On January 1, 2016, Knorr Corporation issued $1,400,000 of 6%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 7%. Bond issue costs associated with the bonds totaled $22,107.40. Required: Prepare the journal entries to record the following: January 1, 2016 Sold the bonds at an effective rate of 7% December 31, 2016 First interest payment using the effective interest method December 31, 2016 Amortization of bond issue costs using the straight-line method December 31, 2017 Second interest payment using the effective interest method December 31, 2017 Amortization of bond issue costs using the straight-line method
On January 1, 2016, Knorr Corporation issued $1,400,000 of 6%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 7%. Bond issue costs associated with the bonds totaled $22,107.40. Required: Prepare the journal entries to record the following: January 1, 2016 Sold the bonds at an effective rate of 7% December 31, 2016 First interest payment using the effective interest method December 31, 2016 Amortization of bond issue costs using the straight-line method December 31, 2017 Second interest payment using the effective interest method December 31, 2017 Amortization of bond issue costs using the straight-line method
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 2016, Knorr Corporation issued $1,400,000 of 6%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 7%. Bond issue costs associated with the bonds totaled $22,107.40.
Required:
| Prepare the |
| January 1, 2016 | Sold the bonds at an effective rate of 7% |
| December 31, 2016 | First interest payment using the effective interest method |
| December 31, 2016 | Amortization of bond issue costs using the straight-line method |
| December 31, 2017 | Second interest payment using the effective interest method |
| December 31, 2017 | Amortization of bond issue costs using the straight-line method |
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