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Oriole SpA issued €400,000, 7%, 20-year bonds on January 1, 2020, for €360,727. This price resulted in an effective- interest rate of 8% on the bonds. Interest is payable annually on January 1. Oriole uses the effective-interest method to amortize bond premium or discount.

Oriole SpA issued €400,000, 7%, 20-year bonds on January 1, 2020, for €360,727. This price resulted in an effective- interest rate of 8% on the bonds. Interest is payable annually on January 1. Oriole uses the effective-interest method to amortize bond premium or discount.

FINANCIAL ACCOUNTING
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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Oriole SpA issued €400,000, 7%, 20-year bonds on January 1, 2020, for €360,727. This price resulted in an effective- interest rate of 8% on the bonds. Interest is payable annually on January 1. Oriole uses the effective-interest method to amortize bond premium or discount. Prepare the journal entry to record the accrual of interest and the discount amortization on December 31, 2020. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. Interest Expense 31 Premium on Bonds Payable Interest Payable
Transcribed Image Text:Oriole SpA issued €400,000, 7%, 20-year bonds on January 1, 2020, for €360,727. This price resulted in an effective- interest rate of 8% on the bonds. Interest is payable annually on January 1. Oriole uses the effective-interest method to amortize bond premium or discount. Prepare the journal entry to record the accrual of interest and the discount amortization on December 31, 2020. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. Interest Expense 31 Premium on Bonds Payable Interest Payable
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