Chapter 14, Problem 12E

On October 1, 2019, Ball Company issued 9% bonds dated October 1, 2019, with a face amount of $200,000. The bonds mature in 10 years. Interest is paid semiannually on March 31 and September 30. The proceeds from the bond issuance were $205,294.53 to yield 8.6%. Ball Company has a December 31 fiscal year-end and does not use reversing entries.

Required:

1. 1. Prepare journal entries to record the issuance of the bonds and the interest payments for 2019 and 2020 using the effective interest method.
2. 2. Prepare journal entries to record the issuance of the bonds and the interest payments for 2019 and 2020 using the straight-line method.