Larkspur Inc. issued $802,000 of 11.00%, 19-year bonds on January 1, 2017 at 101. Interest...
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Larkspur Inc. issued $802,000 of 11.00%, 19-year bonds on January 1, 2017 at 101. Interest is payable semi-annually on July 1 and January 1. Larkspur Inc. uses the effective interest method of amortization for any bond premium or discount. Assume an effective yield of 9.75%. (With a market rate of 9.75%, the issue price would be slightly higher. For simplicity, ignore this.) A) Prepare the journal entry to record the issuance of the bonds. (2) B) Prepare the journal entry to record the payment of interest and the related amortization on July 1, 2017. (3) C) Prepare the journal entry to record the accrual of interest and the related amortization on December 31, 2017 (3)
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