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2 September, 05:57

Legacy issues $570,000 of 8.5%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $508,050 when the market rate is 12%.

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  1. 2 September, 06:41
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    journal entry based on straight line method are given below

    Explanation:

    given data

    issues = $570,000

    rate = 8.5 %

    time = 4 year

    issued = $508,050

    market rate = 12%

    to find out

    prepare journal entry

    solution

    journal entry based on straight line method

    date general journal Debit Credit

    June 30 bond interest expenses $31969

    Discount on Bonds payable $7744

    = (570000-508050) : 8

    Cash = 570000 * 8.5% : 2 $24225

    December 31 Bond interest expense $31969

    Discount on Bonds payable $7744

    = (570000-508050) : 8

    Cash = 570000 * 8.5% : 2 $24225
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