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What is the journal entry that will be recorded on december

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Question 1: On October 1, 2015 Magic Marker Incorporated issued twenty-year bonds with a face value of $1,000,000. The proceeds of the bond issue amounts to $1,060,000. The bonds bear interest at 10% per year, payable semi-annually on April 1 and October 1. The effective interest rate is 9.3% and the company uses the effective interest method. Magic Marker Incorporated has a December 31 year-end date. What is the journal entry that will be recorded on December 31, 2015?

Question 2: What is the journal entry that is recorded on April 1, 2016?

a. Dr. Interest expense on bonds $24,645. Dr. Premium on Bonds $355. Dr. Interest payable $25,000. Cr. Cash $50,000

b. Dr. Interest expense on bonds $25,000. Cr. Cash $25,000

c. Dr. Interest expense on bonds $50,000. Cr. Cash $50,000

d. Dr. Interest expense on bonds $26,500. Cr. Premium on bonds $1,500. Cr. Cash $25,000

Reference no: EM132553807

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