Prepare the necessary journal entries to record the issue

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Problem 1: Red Corporation started its business in 2020 and sold appliances worth $319,000 in 2020. The company provided a 2- year limited warranty for all sales. As per company estimate warranty costs would be 2% of sales in the first year and 3.5% of sales in the second year. By end of 2020 Red Corporation had already spent $1,870 on warranty repairs. On January 1, 2020, Red Corporation issued $188,000, 5-year bonds, with coupon rate of 6%, paid semi-annually. Prepare the necessary journal entries to record the issue of the bond at face value and the payment of the first coupon on June 30, 2020.

Reference no: EM132992451

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