Case Scenario:
Danny Ferry Co. sells $250,000 of 10% bonds on March 1, 2007. the bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2010. The bonds yield 12%. Give entriels through December 21, 2008.
Instructions:
Prepare all the relevant journal entries from the time of sale until the date indicated. Use the effective interest method for discount and premium amortization (construct amortization tables where applicable). Amortize premium or discount on interest dates and at year-end. (Assume that no reversing entries were made).