BUS 253 Prepare the journal entry to record the bond issuance
On February 1, 2016, One Minute Inc. issued 10% bonds dated February 1, 2016 with a face amount of $200,000. The bonds sold for $239,588 and mature in 20 years. The effective interest rate for these bonds was 8%. Interest is paid semiannually on July 31 and January 31. One Minute’s fiscal year is the calendar year. One Minute uses the effective interest method of amortization.
a)Prepare the journal entry to record the bond issuance on February 1, 2016.
b)Prepare the entry to record interest on July 31, 2016.
c)Prepare the necessary Journal entry on December 31, 2016.
d)Prepare the necessary journal entry on January 31, 2017.