Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 14, Problem 14.11E
Bonds; effective interest;
• LO14–2
On February 1, 2018, Strauss-Lombardi issued 9% bonds, dated February 1, with a face amount of $800,000. The bonds sold for $731,364 and mature on January 31, 2038 (20 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. Strauss-Lombardi’s fiscal year ends December 31.
Required:
1. Prepare the
2. Prepare the journal entry to record interest on July 31, 2018 (at the effective rate).
3. Prepare the adjusting entry to accrue interest on December 31, 2018.
4. Prepare the journal entry to record interest on January 31, 2019.
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Chapter 14 Solutions
Intermediate Accounting
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