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Prepare the journal entries to record accrual of interest

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Question - On January 1, 2020, Wildhorse Company issued $2,020,000, 7%, 10-year bonds at $2,168,674. This price resulted in a 6% effective-interest rate on the bonds. Wildhorse uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on each January 1.

Required - Prepare the journal entries to record the following transactions:

(1) The issuance of the bonds on January 1, 2020.

(2) Accrual of interest and the amortization of the premium on December 31, 2020.

(3) The payment of interest on January 1, 2021.

(4) Accrual of interest and amortization of the premium on December 31, 2021.

Reference no: EM132742212

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