Recording the given transactions

Reference no: EM13256576

China Company issued $1,000,000 of6-year, 12% bonds, effective interest rate is13%. The bonds were purchased by USA Co. on theissue date at the issueprice.

Present entries to record the following transactions:

(a)

ChinaCompany
(1)	Issuance ofbonds.
(2)	Payment of firstsemiannual interest on December 31, 2006.
(3)	Amortization bystraight-line method of bond premium or discount on December 31,2006.

(b)

USACompany
(1)	Purchase ofbonds.
(2)	Receipt of firstsemiannual interest amount on December 31, 2006.
(3) (4)	Amortization bystraight-line method of bond premium or discount on December 31,2006. Sale of Bonds at101, less broker's fees of 2,300. The unamortized premium ordiscount balance at time of sale is $10,000, and accrued interestwas 1,000.

Reference no: EM13256576

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