Problem:
Siburo Company issued $300,000, 11%, 10 year bond on January 1, 2010 for $318,694. This price resulted in an effective interest rate of 10% on the bonds. Interest is payable semiannualy on July 1 and January 1. Siburo uses the effective interest metod to amortize bond premium or discount.
Required:
Question: Prepare the journal entries to record the following (Round to the nearest dollar).
(a) The issuance of the bonds.
(b) The payment of interest and the premium amortization on July 1, 2010, assuming that interest was not accrued on June 30.
(c) The accrual of interest and the premium amortization on December 31, 2010
Note: Please show basic calculation