Recording Bond Issue and First Interest Payment with Discount (Straight-Line Amortization)
On January 1, 2011. Clearwater Corporation sold a $750.000. 8 percent bond issue (9 percent market rate). The bonds were dated January 1, 2011. pay interest each December 31. and mature in 10 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 December 31, 2011. Use straight-line amortization.
3. Show how the interest expense and the bonds payable should be reported on the December 31. 201 annual financial statements.
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