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Prepare the discount amortization on december

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Reference no: EM132566610

Lorance SpA issued €400,000, 7%, 20-year bonds on January 1, 2020, for €360,727. This price resulted in an e?ective-interest rate of 8% on the bonds. Interest is payable annually on January 1. Lorance uses the e ective-interest method to amortize bond premium or discount.

Instructions

Question 1: Prepare the journal entries to record the following. (Round to the nearest euro.)

a. The issuance of the bonds.

b. The accrual of interest and the discount amortization on December 31, 2020.

c. The payment of interest on January 1, 2021.

(Prepare entries for issuance of bonds, payment of interest, and amortization of discount using e?ective-interest method)

Reference no: EM132566610

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