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Discount Amortization Question On the first day of the fiscal year, a company issues a $4,600,000,...

Discount Amortization Question

On the first day of the fiscal year, a company issues a $4,600,000, 6%, 8-year bond that pays semiannual interest of$138,000 (4,600,000*6%*1/2), receiving cash of $4,321,835. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar.

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Answer #1

Journal entry

Date Account and explanation Debit Credit
Interest expense 155385
Discount on bonds payable (278165/16) 17385
Cash 138000
(To record interest payment)
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