On January 1, 2017, Lock Corporation issued $1,800,000 facevalue, 5%, 10-year bonds at $1,667,510. This price resulted in aneffective-interest rate of 6% on the bonds. The bonds pay annualinterest January 1.
Instructions (Round all computations to the nearest dollar.)
(a) Prepare the journal entry to record the issuance of the bondson January 1, 2017.
(b) Prepare the journal entry to record the accrual of interest andthe amortization of the discount on December 31, 2017 and December31, 2018 assuming the use of straight- line method to amortize thediscount/premium.
(c) Prepare an amortization table for 10 interest period for thisbond issue using the effective interest method to amortize thediscount/premium.
(d) Prepare the journal entry to record the accrual of interest andthe amortization of the discount on December 31, 2017. Prepare thejournal entry to record the payment of interest on January 1, 2018.Prepare the journal entry to record the accrual of interest and theamortization of the discount on December 31, 2018. Prepare thejournal entry to record the accrual of interest and theamortization of the discount on December 31, 2019.
On January 1, 2017, Lock Corporation issued $1,800,000 facevalue, 5%, 10-year bonds at $1,667,510. This price resulted in aneffective-interest rate of 6% on the bonds. The bonds pay annualinterest January 1.
Instructions (Round all computations to the nearest dollar.)
(a) Prepare the journal entry to record the issuance of the bondson January 1, 2017.
(b) Prepare the journal entry to record the accrual of interest andthe amortization of the discount on December 31, 2017 and December31, 2018 assuming the use of straight- line method to amortize thediscount/premium.
(c) Prepare an amortization table for 10 interest period for thisbond issue using the effective interest method to amortize thediscount/premium.
(d) Prepare the journal entry to record the accrual of interest andthe amortization of the discount on December 31, 2017. Prepare thejournal entry to record the payment of interest on January 1, 2018.Prepare the journal entry to record the accrual of interest and theamortization of the discount on December 31, 2018. Prepare thejournal entry to record the accrual of interest and theamortization of the discount on December 31, 2019.
