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Prepare entries for the ayment of interest

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Question - On January 1, 2020, Newave Ltd. (Newave), issued $1,000,000 face value, five-year bonds with a stated rate of 5% and an effective rate of 4%. The proceeds received for this bond issue were $1,044,913.

Interest is paid semi-annually on July 1 and December 31 of each year. Newave uses the effective-interest method of amortization.

Required - Prepare entries for the following transactions:

a) Issuance of the bonds on January 1, 2020.

b) Payment of interest and the amortization of the discount or premium on July 1, 2020.

Reference no: EM132824853

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