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Prepare the journal entry to record interest on december

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Reference no: EM13554913

On January 1, 2011, Club Company issued 10% bonds, dated January 1, 2011, with face amount of $20 million. The bonds matue in 2020 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31.

Requred:

1. Determine the price of teh bonds at January 1, 2011.

2. Prepare the journal entry to record the bond issuance by Club on January 1, 2011.

3. Prepare the journal entry to record interest on June 30, 2011, using the straight-line method.

4. Prepare the journal entry to record interest on December 31, 2011 using the straight-line method.

5. Prepare the journal entry to record interest on June 30, 2011, using the effective interest method.

6. Prepare the journal entry to record intrest on December 31, 2011, using the effective interest method.

Reference no: EM13554913

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