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Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372 Exercise 18
(Supplement 10B) Recording Bond Issuance and Interest Payment (Effective-interest Amortization)
Clem Company issued $800,000, 10-year, 5 percent bonds on January 1, 2012. The bonds sold for $741,000. Interest is payable annually on December 31. Using effective-interest amortization, prepare journal entries to record ( a ) the bond issuance on January 1, 2012, and ( b ) the payment of interest on December 31, 2012. The market interest rate on the bonds is 6 percent.
Clem Company issued $800,000, 10-year, 5 percent bonds on January 1, 2012. The bonds sold for $741,000. Interest is payable annually on December 31. Using effective-interest amortization, prepare journal entries to record ( a ) the bond issuance on January 1, 2012, and ( b ) the payment of interest on December 31, 2012. The market interest rate on the bonds is 6 percent.
Explanation
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Effective-interest method:
• The Effect...
Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
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