Question

1. On 01-01-15, B issued $3,000,000 of 3.5%, 5-year term bonds. The bonds pay interest every July 1 and January 1. At the time B issued the bonds, similar bonds paid 3%. Upon issuing the bonds, B incurred and paid $27,000 of bond issuance costs. B uses the effective-interest method to amortize any bond discount or premium. B only prepares AJEs every December 31. Prepare the entries B should make on:
   1. 01-01-15
   2. 07-01-15
   3. 12-31-15
   4. 01-01-16

Answer 1

page-1 Given data Given that the on 01-01-15 B issued $3008,000 of 3.5%, 5 yeagle tegim bond Then the bond pay the Integjest evesly july ! and January 1 Given that at the time B issued the bonds Similas bonds paid 34% upon issuing the bonds, B incustoled and paid $ 27,000 of Bond issuance costs. 3.564. Bond Ale Da $ 300000 To cash | Banks Alc $ 300000 ( being bond lue) Integgest exp Alo Do $ 12,000 To cash / Banis Alc $ 12,000 ( being Integjest paid

page 2 00 C. No Entries D. Integjest Exp. Ale Dot $ 12000 To cash | Banks Ale $ 12,000 (being Integjest paid