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2. (15 points) Webb Co. sold a 7%, 10-year bond with a $3,000,000 face value on January 1, 2019. Interest is payable annually
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Answer #1

a) Interest paid in Cash each year = 3000000*7% = 210000

b) Selling price of bonds = 210000*7.3601+3000000*.5584 = 3220821

c) Journal entry

Date account and explanation Debit Credit
Interest expense (3220821*6%) 193249.26
Premium on bonds payable 16750.74
Interest payable 210000
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