On January 1, 2020, Skysong Corporation issued $660,000 of 9% bonds, due in 8 years. The bonds were issued for $624,235, and pay interest each July 1 and January 1. Skysong uses the effective-interest method. Prepare the company’s journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Assume an effective-interest rate of 10%
On January 1, 2020, Skysong Corporation issued $660,000 of 9% bonds, due in 8 years. The bonds were issued for $624,235, and pay interest each July 1 and January 1. Skysong uses the effective-interest method.
Prepare the company’s
Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is equal to the market rate, then the bonds are issued at face value.
If the interest rate is less than the market rate, then the bonds are issued at discount.
If interest rate is more than the market rate, then the bonds are issued at premium.
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