Journal entry at the date of the bond issuance

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On January 1, 2010, Osborn Company sold 12% bonds having a maturity value of $800,000 for $860,651.79, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2010, and mature January 1, 2015, with interest payable December 31 of each year. Osborn Company allocates interest and unamortized discount or premium on the effective interest basis.

Instructions

(a) Prepare the journal entry at the date of the bond issuance.

(b) Prepare a schedule of interest expense and bond amortization for 2010-2012.

(c) Prepare the journal entry to record the interest payment and the amortization for 2010.

(d) Prepare the journal entry to record the interest payment and the amortization for 2012.

Reference no: EM13144938

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