Question - Lorance Corporation issued $831,000, 9%, 10-year bonds on January 1, 2015, for $779,220. This price resulted in an effective-interest rate of 10% on the bonds. Interest is payable semiannually on July 1 and January 1. Lorance uses the effective-interest method to amortize bond premium or discount.
Part A - Prepare the journal entry to record the issuance of the bonds.
Part B - Prepare the journal entry to record the payment of interest and the discount amortization on July 1, 2015, assuming that interest was not accrued on June 30.
Part C - Prepare the journal entry to record the accrual of interest and the discount amortization on December 31, 2015.