On January 1, 2022, ABC issued 12% nominal rate bonds dated January 1, 2022, with...
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Accounting
On January 1, 2022, ABC issued 12% nominal rate bonds dated January 1, 2022, with principal of $5,000,000. The bonds mature on January 1, 2032. The effective interest rate is 14%. Interest is paid annually on January 1 of each year beginning 1/1/23. The company closes books on December 31 of each year.
Required:
1. Prepare the entry to record the bond issue on January 1, 2022.
2. Prepare the entry to record the 2022 interest expense, using the effective interest method.
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