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What would be the amortization for the first year

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Question - Debit the cash account by $1,865,791 as this is the cash received at the time of issuance.

Debit the Discount on bond account $134,209 and it will be amortised over the period of bond life.

Credit the bond payable account by $2,000,000 as this is the value which will be paid at the time of maturity.

The bond of $134,209 would have to be amortized over the life of the bond. There are two methods of amortization. The straight line method and the effective rate.

Assume that you are using the effective rate method of amortization, what would be the amortization for the first year? and how would you journalize it?

Reference no: EM132724594

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