On January 1, 2017, Ashlock Chemical issued RM4,000,000, 10%, 10-year bonds at RM4,543,627. This price resulted in an 8% effective interest rate on the bonds. Ashlock uses the effective-interest method to amortize bond premium or discount. The bond pays annual interest on each January 1. Instructions (a) Prepare the journal entries to record the following transactions 1. The issuance of the bonds on January 1, 2017 2. Accrual of interest and amortization of the premium on December 31, 2017 3. The payment of interest on January 1, 2018. 4. Accrual of interest and amortization of the premium on December 31, 2018 (b) Show the proper non-current liability statement of financial position presentation for the bond liability at December 31, 2018.

On January 1, 2017, Ashlock Chemical issued RM4,000,000, 10%, 10-year bonds at RM4,543,627. This price resulted in an 8% effective interest rate on the bonds. Ashlock uses the effective-interest method to amortize bond premium or discount. The bond pays annual interest on each January 1. Instructions (a) Prepare the journal entries to record the following transactions 1. The issuance of the bonds on January 1, 2017 2. Accrual of interest and amortization of the premium on December 31, 2017 3. The payment of interest on January 1, 2018. 4. Accrual of interest and amortization of the premium on December 31, 2018 (b) Show the proper non-current liability statement of financial position presentation for the bond liability at December 31, 2018.

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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