On July 1, 2018, ABC Co. issued $6,000,000, 6%, 4-year bonds. The bonds were sold to yield an effective-interest rate of 8%. Interest is paid semiannually on July 1 and January 01. The company uses the effective-interest method of amortization. Required: For ABC Co. answer the following independent requirements: a. Prepare the necessary journal entry on July 1, 2018. b. Assume that the accounting date for ABC Co. is December 31, prepare the necessary journal entry on December 31, 2018. c. Assume that the bond was issued on September 30, 2018, prepare the journal entry on January 01, 2019. d. Assume that the accounting date for ABC Corporation is November 30, prepare the journal entry on November 30, 2018.
On July 1, 2018, ABC Co. issued $6,000,000, 6%, 4-year bonds. The bonds were sold to yield an effective-interest rate of 8%. Interest is paid semiannually on July 1 and January 01. The company uses the effective-interest method of amortization. Required: For ABC Co. answer the following independent requirements: a. Prepare the necessary journal entry on July 1, 2018. b. Assume that the accounting date for ABC Co. is December 31, prepare the necessary journal entry on December 31, 2018. c. Assume that the bond was issued on September 30, 2018, prepare the journal entry on January 01, 2019. d. Assume that the accounting date for ABC Corporation is November 30, prepare the journal entry on November 30, 2018.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On July 1, 2018, ABC Co. issued $6,000,000, 6%, 4-year bonds. The bonds were sold to yield an effective-interest rate of 8%. Interest is paid semiannually on July 1 and January 01. The company uses the effective-interest method of amortization.
Required:
For ABC Co. answer the following independent requirements:
a. Prepare the necessary journal entry on July 1, 2018.
b. Assume that the accounting date for ABC Co. is December 31, prepare the necessary
journal entry on December 31, 2018.
c. Assume that the bond was issued on September 30, 2018, prepare the journal entry on
January 01, 2019.
d. Assume that the accounting date for ABC Corporation is November 30, prepare the
journal entry on November 30, 2018.
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