Prepare the journal entry to record the issuance of the bond

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Reference no: EM133328398

Question On January 1, 2021 XYZ Corporation issued five-year $1,000,000, 7%. The bond was issued at $1,050,000. Interest is paid annually on December 31. The market rate of interest is 6%. (8 marks)

Required:

Prepare the journal entry to record the issuance of the bond at January 1, 2021.

Using the effective interest rate method, prepare the journal entry to recognize the interest expense at December 31, 2021.

What is the carrying value of the bond at December 31, 2021 and January 1, 2026 (the maturity date)?

Reference no: EM133328398

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