Problem
On January 1, 2017, Tranche Corp. issued $750,000 of 8%, 10-year bonds, with annual interest payments on December 31. The bonds were issued for $657,831 yielding an effective-interest rate of 10%. Tranche Corp. uses the effective-interest method of amortization.
i. Prepare the necessary journal entries to record the issuance of the bonds and the first interest payment.
ii. Determine the carrying value of the bonds on December 31, 2017.