On July 1, 2006, S. Strigel Chemical Company issued $5,000,000 face value, 10%, 10-year bonds at $5,679,533. This price resulted in an 8% effective-interest rate on the bonds. Strigel uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on each July 1 and January 1. Prepare the journal entries to record the following transactions. (1) The issuance of the bonds on July 1, 2006. (2) The accrual of interest and the amortization of the premium on December 31, 2006. (3) The payment of interest and the amortization of the premium on July 1, 2007, assuming no accrual of interest on June 30. (4) The accrual of interest and the amortization of the premium on December 31, 2007.
On July 1, 2006, S. Strigel Chemical Company issued $5,000,000 face value, 10%, 10-year bonds at $5,679,533. This price resulted in an 8% effective-interest rate on the bonds. Strigel uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on each July 1 and January 1.
Prepare the
(1) The issuance of the bonds on July 1, 2006.
(2) The accrual of interest and the amortization of the premium on December 31, 2006.
(3) The payment of interest and the amortization of the premium on July 1, 2007, assuming no accrual of interest on June 30.
(4) The accrual of interest and the amortization of the premium on December 31, 2007.
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