Prepare journal entries to record the following transactionsrelating to long-term bonds of Ramirez, Inc. (Showcomputations)
a) On March 1, 2018, Ramirez, Inc. issued $10,000,000, 9% couponrate bonds. The market interest rate was 12%. Interest is payablesemiannually on February 1 and August 1 with the bonds maturing onFebruary 1, 2021. Hint: This is a bond issued between interestdates.
b) On August 1, 2018, Ramirez paid interest on the bonds andrecorded amortization. Ramirez uses effective-interest method ofamortization.
c) On September 1, 2018. Ramirez purchased $6,000,000 face value(60% of initial issuance amount) of the bonds at the $6,200,000PLUS accrued interest.
