On January 1, 2021, Lock Corporation issued $1,800,000 face value, 5%, 10-year bonds at $1,667,518. This price resulted in an effective-interest rate of 6% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest January 1.
Instructions
Round all computations to the nearest dollar.)
- Prepare the journal entry to record the issuance of the bonds on January 1, 2021.
- Prepare an amortization table through December 31, 2023 (three interest periods) for this bond issue.
- Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2021.
- Prepare the journal entry to record the payment of interest on January 1, 2022.
- Prepare the journal entry to record the accrual of interest and the amortization of the discount December 31, 2022..
Solution
