Calculating the discount amortization

Reference no: EM131830824

Question: Woode Corporation issued $400,000, 7%, 20-year bonds on January 1, 2017, for $360,727. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1. Woode uses the effective-interest method to amortize bond premium or discount.

Instructions: Prepare the journal entries to record (round to the nearest dollar):

(a) The issuance of the bonds.

(b) The accrual of interest and the discount amortization on December 31, 2017.

Reference no: EM131830824

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