Make journal entries for the issuance of the bond for interest expense for Year 1 and...

Make journal entries

for the issuance of the bond
for interest expense for Year 1 and Year 2
for the amortization of premium for year 1 and year 2.
1. The straight-line method
  1. Interest expense for year ‘t’

= interest payment for year ‘t’ - amortization of premium for year ‘t’ or + amortization of discount for year ‘t’

Amortization of discount or premium on BP for year ‘t’

= initial balance of discount or premium / # of years in the outstanding period

$7,387/5 years = $1,478/year

Interest expense 10,478

Cash 9,000

Discount on BP 1,478

Must make the above journal entries at the end of each year for 5 years

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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