The Windy City Company issued $500,000 of 12% bonds on January 1, 2020. The bonds were sold for $549,493, and they were expected to yield 10% interest compounded semiannually. The interest dates are June 30 and December 31. The maturity date of the bonds is December 31, 2026. Required: a. Prepare the journal entry to record the issuance of the bonds. b. Using the effective interest method, prepare the journal entries to record the first two interest payments.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The Windy City Company issued $500,000 of 12% bonds on January 1, 2020. The bonds were sold for $549,493, and they were expected to yield 10% interest compounded semiannually.
The interest dates are June 30 and December 31. The maturity date of the bonds is December 31, 2026.
Required:
a. Prepare the journal entry to record the issuance of the bonds.
b. Using the effective interest method, prepare the journal entries to record the first two interest payments.
Transcribed Image Text:The Windy City Company issued $500,000 of 12% bonds on January 1, 2020. The bonds were sold for $549,493, and they were expected to yield 10% interest compounded semiannually. The interest dates are June 30 and December 31. The maturity date of the bonds is December 31, 2026. Required: a. Prepare the journal entry to record the issuance of the bonds. b. Using the effective interest method, prepare the journal entries to record the first two interest payments.
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