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8/31/y1, $3,000,000 face value bonds are issued for $2,600,000 plus accrued interest. These bonds pay interest...

8/31/y1, $3,000,000 face value bonds are issued for $2,600,000 plus accrued interest. These bonds pay interest on October 31 and April 30. These bonds have a coupon rate of 6%, and are dated April 30, y1. The bonds are 20-year bonds, and as such mature on April 30, Y21. Please record the following, using the straight-line approach. This company has a December 31 year end. 8/31/y1, issuance of the bonds (include accrued interest). 10/31/y1, interest payment. 12/31/y1, accrual of interest. 4/30/y2, interest payment.

PLEASE USE THE STRAIGHT LINE APPROACH!! Please show full work so I can understand how to use the STRAIGHT LINE METHOD.

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Date Account Debit Credit
31 Aug Cash ($2,600,000+$60,000) $2,660,000
Discount on Bond Payable $   400,000
     Bond Payable $3,000,000
     Interest Payable ($3,000,000*6%*4/12) $     60,000
(to record bond issuance)
Oct 31 Interest Expense (Plug in) $     51,053
Interest Payable (From Aug 31) $     60,000
     Discounts on Bond Payable ($400,000/38months*2months) $     21,053
     Cash ($3,000,000*6%*6//12) $     90,000
(interest recorded)
Dec 31 Interest Expense (Plug in) $     51,053
     Discounts on Bond Payable ($400,000/38months*2months) $     21,053
     Interest Payable (3m*6%*2/12) $     30,000
(interest recorded)
Apr 30 Interest Expense (Plug in) $   102,105
Interest Payable (From Dec 31) $     30,000
     Discounts on Bond Payable ($400,000/38months*4months) $     42,105
     Cash ($3,000,000*6%*6//12) $     90,000
(interest recorded)

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