Recording Bond Issue and First Interest Payment with Premium (Straight-Line Amortization)
On January 1. 2011. Victor Corporation sold a $1,400,000. 8 percent bond issue (6 percent market rate). The bonds were dated January 1, 2011. pay interest each June 30 and December 31, and mature in four years.
Required:
1. Give the journal entry to record the issuance of the bonds.
2. Give the journal entry to record the interest payment on June 30,2011. Use straight-line amortization.
3. Show how the bond interest expense and the bonds payable should be reported on the June 30. 2011, balance sheet and income statement.
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