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Prepare the journal entry at the date of the bond issuance

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Question - On January 1, 2020, Darden Company issued $5,000,000 face value of 11%, 5-year bonds which provides the bondholders with a 9% market rate (effective-interest rate). The bonds pay semiannual interest on June 30 and December 31.

Required -

a. Prepare the journal entry at the date of the bond issuance. Use the present value tables and round to the nearest dollar.

b. Prepare the journal entry for the payment of interest and the amortization of the premium on June 30, 2020.

c. Prepare the journal entry for the payment of interest and the amortization of the premium on December 31, 2020.

d. How would your answer differ if the effective-interest rate is 11% (no calculations required).

Reference no: EM133089214

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