The Gorman Group issued $900,000 of 13% bonds on June 30, 2021, for $967,707. The bonds were dated on June 30 and mature on June 30, 2041 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually on December 31 and June 30. Required: 1. Prepare the journal entry to record their issuance by The Gorman Group on June 30, 2021. 2. Prepare the journal entry to record interest on December 31, 2021 (at the effective rate). 3. Prepare the journal entry to record interest on June 30, 2022 (at the effective rate).
The Gorman Group issued $900,000 of 13% bonds on June 30, 2021, for $967,707. The bonds were dated on June 30 and mature on June 30, 2041 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually on December 31 and June 30. Required: 1. Prepare the journal entry to record their issuance by The Gorman Group on June 30, 2021. 2. Prepare the journal entry to record interest on December 31, 2021 (at the effective rate). 3. Prepare the journal entry to record interest on June 30, 2022 (at the effective rate).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:E 14-6
Bonds; issuance; effective interest
• LO14-2
The Gorman Group issued $900,000 of 13% bonds on June 30, 2021, for $967,707. The bonds were dated on June 30 and mature on June 30, 2041 (20 years). The market yield for bonds of
similar risk and maturity is 12%. Interest is paid semiannually on December 31 and June 30.
Required:
1. Prepare the journal entry to record their issuance by The Gorman Group on June 30, 2021.
2. Prepare the journal entry t
3. Prepare the journal entry to record interest on June 30, 2022 (at the effective rate).
o record interest on December 31, 2021 (at the effective rate).
Expert Solution
Step 1
Solution:-
Introduction:-
- Journal entry is the first step in the accounting process.
- It is used to record business transactions.
- It is very useful for verify accuracy of business transactions.
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