On January 1, 2017, ABC Electronics Co. issued $250,000 of 6%, 15 year bonds, yielding...
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Accounting
On January 1, 2017, ABC Electronics Co. issued $250,000 of 6%, 15 year bonds, yielding an effective interest rate of 8%. Semiannual interest is payable on June 30 and December 31. The firm uses effective interest method to amortize any discount or premium.
1. Determine the issuance price of the bonds and provide the journal entry recorded (impact on the financial statement equation) on January 1, 2017.
2. Prepare the journal entry (impact on the financial statement equation) for the December 31, 2017 interest payment.
3. Determine the interest expense reported on the 2017 income statement.
4. Determine the carrying value of the bonds on the 12/31/2017 balance sheet.
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