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On January 1,2016,Effron Inc

question 81

Essay

On January 1,2016,Effron Inc.sells $2 million of 8% bonds at face value with interest to be paid at the end of each year.Effron accrues interest at the end of each quarter during the year.
Required:
Part a.Prepare the journal entry to record the bond issuance.
Part b.Prepare the required adjusting journal entry as of March 31,2016.
Part c.Assume the required adjusting journal entries were recorded on June 30 and September 30,2016.Prepare the journal entry to record the payment of interest to bondholders on December 31,2016.


Definitions:

Inverse Demand Function

A mathematical expression that describes the relationship between the price of a good and the quantity demanded, showing how price changes as a function of demand.

Unit Tax

A tax that is imposed on a per unit basis, meaning that a specific amount is taxed for each unit of a good or service sold.

Total Costs

The total of variable and fixed expenses a business faces during the manufacturing of products or delivery of services.

Inverse Demand Function

Expresses the price of a good or service as a function of the quantity demanded, illustrating how price varies with changes in demand.

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