Celine Dion Company issued $600,000 of 10% 20-year bonds on January 1, 2008, at 102. Interest is payable semiannually on July 1 and January 1. Dion Company uses the straight line method of amortization for bond premium or discount.
Prepare the journal entries to record the following.
(a) The issuance of the bonds.
(b) The payment of interest and the related amortization on July 1, 2008.
(c) The accrual of interest and the related amortization on December 31, 2008
Exercise E5
Assume the same information as in E4, except that Celine Dion Company uses the effective interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%.
Prepare the journal entries to record the following. (Round to the nearest dollar)
(a) The issuance of the bonds.
(b) The payment of interest and the related amortization on July 1, 2008.
(c) The accrual of interest and the related amortization on December 31, 2008
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