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Use the effective interest method to amortize the premium

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Question - On April 1, 2014, Smart Way Freight Company sold $200,000 of its 9.5 percent, 20-year bonds at 106. The semiannual interest payment dates are April 1 and October 1. The market interest rate is 8.9 percent. The firm's fiscal year ends March 31. Prepare journal entries to record the sale of the bonds on April 1, the accrual of interest and amortization of premium on March 31, and the first interest payment on October 1. Use the effective interest method to amortize the premium.

Reference no: EM132559859

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