Given the Following Data, Prepare the Journal Entry to Record

question 127

Essay

Given the following data, prepare the journal entry to record interest expense and any related amortization on December 31 of the first year using the effective interest rate method. Assume interest is paid annually on January 1. The bonds were issued on January 1 for $7,411,233.?

Bonds payable, maturing in 10 years = $8,000,000Contract interest rate = 5%Market
(effective) interest rate = 6%?Round answers to nearest dollar.

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Definitions:

Assumed Name

An assumed name, also known as a trade name or "doing business as" (DBA), is a name a business uses that is different from its legal, registered name.

Device

A piece of equipment designed for a particular purpose, often electronic in nature.

Demand Instrument

A financial document that requires the payment of money immediately or on demand.

Time Of Payment

The specific period or date by which payment for goods or services received must be made.