Prepare journal entry Kostansas Corporation should record

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Q1. On January 1, a company issued 10%, 10-year bonds with a par value of $720,000. The bonds pay interest each July 1 and January 1. The bonds were sold for $817,860 cash, based on an annual market rate of 8%. Prepare the issuer's journal entry to record the first semiannual interest payment assuming the effective interest method is used.

Q2. On January 3, Kostansas Corporation purchased 5,000 shares of Morton, Incorporated for $40 per share. These shares represent a 40% ownership in Morton, Incorporated. Prepare the journal entry Kostansas Corporation should record for the purchase of this investment.

Reference no: EM133119762

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