Reference no: EM132517404
Question - On January 1, 2016, Knorr Corporation issued $1,400,000 of 7%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 8%. Bond issue costs associated with the bonds totaled $21,540.76.
Required - Prepare the journal entries to record the following:
January 1, 2016 Sold the bonds at an effective rate of 8%.
December 31, 2016 First interest payment using the effective interest method.
December 31, 2016 Amortization of bond issue costs using the straight-line method.
December 31, 2017 Second interest payment using the effective interest method.
December 31, 2017 Amortization of bond issue costs using the straight-line method.