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Prepare the journal entries to record payment of interest

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Question - Evelynn Company issued $306,300, 9%, 10-year bonds on January 1, 2014, for $327,121. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable semiannually on July 1 and January 1. Evelynn uses the effective-interest method to amortize bond premium or discount.

Prepare the journal entries to record the following.

(a) The issuance of the bonds.

(b) The payment of interest and the premium amortization on July 1, 2014, assuming that interest was not accrued on June 30.

(c) The accrual of interest and the premium amortization on December 31, 2014.

Reference no: EM132095403

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