Prepare the adjusting entry to be made on december 31

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Question

On June 1, 2022, Pina Company sold 3,420,000 in long term bonds for 29997000. The bonds will mature in 10 years and have a state interest rate of 8% and a yield rate of 10%. The bonds pay interest annually in MAy 31 of each year. The bonds are to be accounted for under the effective-interest method.

A. Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31.

B. Assuming that interest and discount amortization are recorded each May 31, prepare the adjusting entry to be made on December 31, 2021.

Reference no: EM132380928

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