Solution-Create the journal entry to record interest expense

Create the journal entry to record interest expense

Reference no: EM133184948

Question - On February 1, Year 1, Lotrim Company issued 9% bonds, dated February 1, with a face amount of $800,000. The bonds were sold for $731,364 and mature on January 31, Year 21 (20 years). The market rate for bonds of similar risk and maturity was 10%. Interest is payable semiannually on January 31 and July 31. Lotrim's fiscal year ends on December 31.

Required -

A. Create the journal entry to record the issuance of the bonds on February 1, Year 1.

B. Create the journal entry to record interest expense on July 31, Year 1 on the effective-interest method.

C. Create the journal entry to accrue interest expense on December 31, Year 1.

D. Create the journal entry to record the payment of interest on January 31, Year 2.

Reference no: EM133184948

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Create the journal entry to record interest expense

Reference no: EM133184948

Reference no: EM133184948

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