Question

eBook Calculator Cornerstone Exercise 9-34 Issued Bonds at a Discount (Effective Interest) Crafty Corporation issued $475,000 of 5%, 7-year bonds on January 1, 2020, for $448,484. Interest is paid annually on December 31. The market rate of interest is 6%. Required: Basic Prepare the journal entry for December 31, 2020 and 2021. If required, round your answers to the nearest whole dollar Dec 31, 2020 Interest Expense Cash Discount on Bonds Payable Dec 31, 2021 Interest Expense Cash Discount om Bonds Payable Check My Work 1 mare Check My Workeren Al work saved

Answer 1

Solution:

Journal Entries - Crafty Corporation
Date	Particulars	Debit	Credit
31-Dec-20	Interest expense Dr ($448,484*6%)	$26,909.00
	To Cash		$23,750.00
	To Discount on bond payable		$3,159.00
	(To record interest expense and discount amortization)
31-Dec-21	Interest expense Dr [($448,484 + $3,159)*6%]	$27,099.00
	To Cash		$23,750.00
	To Discount on bond payable		$3,349.00
	(To record interest expense and discount amortization)