value 10.00 points Clem Company issued $960,000. 10-year, 4 percent bonds on Jan

Question

value 10.00 points Clem Company issued $960,000. 10-year, 4 percent bonds on January 1, 2015. The bonds sold for $870,000. Interest is payable annually on December 31 Using effective-interest amortization, prepare ounal entries to record (a) the bond issuance on January 1, 2015, and (b) the payment of interest on December 31. 2015. The market interest rate on the bonds is 5 percent (If no entry is required for a transactionlevent, select "No Journal Entry Required in the first account field.) view transactlonistview general journal Journal Entry Worksheet Record the issuance of bonds with a face value of $960,000 for $870,000. Date General Journal Debit Credit January 01, 2015

Explanation / Answer

year interest payment(2%) interest expense(2.5%) amortisation of premium balance in discount face value book value 0 90000 960000 870000 1 19200 21750 2550 87450 960000 872550 2 19200 21813.75 2614 84836 960000 875164 Journal cash 870000 discount on issue 90000 To bonds payable 960000 interest expense 21750 To interest payable 19200 To discount on issue 2550

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