Interest payment on the bond using effective interest method

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Reference no: EM131448257

Buffer Enterprises has issued bonds on January 1, 2016. The bonds have a maturity value of $100,000 with a stated annual interest rate of 10%. Interest is paid semiannually on June 30 and December 31, and the bonds mature December 31, 2025 The bond is sold for $92,976.39 to yield an effective interest rate of 12%. The bond is for a ten year period.

Based on the above information make the following journal entries. You must show supporting computations to receive credit.

A. Record the sale of the bond.

B. Record the June 30th interest payment if the bond premium/discount is amortized using the straight-line method.

C. Record the June 30th interest payment on the bond using the effective interest method. Show all work to support your calculations.

Reference no: EM131448257

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