Oriole SpA issued €400,000, 7%, 20-year bonds on January 1, 2020, for €360,727. This price resulted in an effective- interest rate of 8% on the bonds. Interest is payable annually on January 1. Oriole uses the effective-interest method to amortize bond premium or discount. (a) Your answer is partially correct. Prepare the journal entry to record the issuance of the bonds. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. Cash 1 Bonds Payable

Effective Interest Method: It is an accounting method that helps in calculating the discount on…

Answered: Oriole SpA issued €400,000, 7%, 20-year bonds on January 1, 2020, for €360,727. This price resulted in an effective- interest rate of 8% on the bonds. Interest…

FINANCIAL ACCOUNTING

10th Edition

ISBN: 9781259964947

Author: Libby

Publisher: MCG

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Question

how to calculate this? please elaborate thank you

Oriole SpA issued €400,000, 7%, 20-year bonds on January 1, 2020, for €360,727. This price resulted in an effective-
interest rate of 8% on the bonds. Interest is payable annually on January 1. Oriole uses the effective-interest method
to amortize bond premium or discount.
(a)
- Your answer is partially correct.
Prepare the journal entry to record the issuance of the bonds. (Round answers to 0 decimal places, e.g.
15,250. Credit account titles are automatically indented when amount is entered. Do not indent
manually.)
Date Account Titles and Explanation
Debit
Credit
Jan.
Cash
1
Bonds Payable

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