Prepare the journal entries for the issuance of the bonds in both QS 14-1 and QS 14-2. Assume that both bonds are issued for cash on January 1, 2013.
1.Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1/2. The straight-line method is used to allocate interest expense.
2.Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 1/4 . The effective interest method is used to allocate interest expense.