Problem - On January 1, 2017, Lock Corporation issued $1,800,000 face value, 5%, 10-year bonds at $1,667,510. This price resulted in an effective-interest rate of 6% on the bonds. The bonds pay annual interest January 1.
Instructions (Round all computations to the nearest dollar.)
(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2017.
(b) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2017 and December 31, 2018 assuming the use of straight- line method to amortize the discount/premium.
(c) Prepare an amortization table for 10 interest period for this bond issue using the effective interest method to amortize the discount/premium.
(d) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2017.
(e) Prepare the journal entry to record the payment of interest on January 1, 2018.
(f) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2018.
(g) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2019.