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Determine journal entry to record the issuance of bonds

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Splish Brothers Inc. issued $770,000 of 10.40%, 19-year bonds on January 1, 2020, at 103. Interest is payable semi-annually on July 1 and January 1. Splish Brothers Inc. uses the effective interest method of amortization for any bond premium or discount. Assume an effective yield of 10.00%. (With a market rate of 10.00%, the issue price would be slightly higher. For simplicity, ignore this.)

Question 1. Prepare the journal entry to record the issuance of the bonds. .

Question 2. Prepare the journal entry to record the payment of interest and the related amortization on July 1, 2020.

Question 3. Prepare the journal entry to record the accrual of interest and the related amortization on December 31, 2020.

Reference no: EM132462252

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