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Yale Corporation issued to Zap Corporation $60,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Assume that the company uses the effective interest amortization method and bond issuance costs are $1,500. If the bonds were sold to yield 9%, provide journal entries to be made at each of the following dates. a. January 1, for issuance of bonds. b. June 30, for the first interest payment.

Yale Corporation issued to Zap Corporation $60,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Assume that the company uses the effective interest amortization method and bond issuance costs are $1,500. If the bonds were sold to yield 9%, provide journal entries to be made at each of the following dates. a. January 1, for issuance of bonds. b. June 30, for the first interest payment.

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 7MCQ
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Yale Corporation issued to Zap Corporation $60,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Assume that the company uses the effective interest amortization method and bond issuance costs are $1,500. If the bonds were sold to yield 9%, provide journal entries to be made at each of the following dates. a. January 1, for issuance of bonds. b. June 30, for the first interest payment. • Note: Round your answer to the nearest whole dollar. Date a. Jan. 1 Account Name Cash Discount on Bonds Payable Bonds Payable To record bond issuance. b. June 30 Interest Expense Discount on Bonds Payable Cash To record interest payment. < < > > Dr. 54,597 0 0 0 0 0 Cr. 0x 2,374 * 60,000 0x 0x 0x
Transcribed Image Text:Yale Corporation issued to Zap Corporation $60,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1. Assume that the company uses the effective interest amortization method and bond issuance costs are $1,500. If the bonds were sold to yield 9%, provide journal entries to be made at each of the following dates. a. January 1, for issuance of bonds. b. June 30, for the first interest payment. • Note: Round your answer to the nearest whole dollar. Date a. Jan. 1 Account Name Cash Discount on Bonds Payable Bonds Payable To record bond issuance. b. June 30 Interest Expense Discount on Bonds Payable Cash To record interest payment. < < > > Dr. 54,597 0 0 0 0 0 Cr. 0x 2,374 * 60,000 0x 0x 0x
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