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.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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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