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Prepare the journal entry to record the bond issuance

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Question - On July 1, 2020, Falcon Corp. issued $800,000 par value, 10%, 10-year bonds for 98.

- The interest payable semi-annually on January 1 and July 1.

- The market interest rate is 11%.

- On January 1, 2022, Eagle offered to buy back the bonds at 99.

- Only half of the bondholders accepted the offer.

- Falcon uses the effective-interest method for amortizing premium or discount.

a) Prepare the journal entry to record the bond issuance.

b) Prepare the adjusting entry on December 31, 2020, the end of the fiscal year.

c) Prepare the entry to record the retirement of the bonds on January 2, 2022.

Reference no: EM133148749

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