On June 30, 2017 Naruto Company sold to Sasuke Company P1,000,000, 8% 5 year term bonds. The bonds were dated January 1, 2017, interest date is every December 31, the total issue price was to give it a yield of 6%. Total cash received from the issuance

On June 30, 2017 Naruto Company sold to Sasuke Company P1,000,000, 8% 5 year term bonds. The bonds were dated January 1, 2017, interest date is every December 31, the total issue price was to give it a yield of 6%. Total cash received from the issuance

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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On January 1, 2016, Knorr Corporation issued $1,000,000 of 9%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 10%. Bond issue costs associated with the bonds totaled $18,000. Required: Prepare the journal entries to record the following: January 1, 2016 Sold the bonds at an effective rate of 10% 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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