Miller, Inc. sold $1,000,000 of bonds at par on January 1, 2018. The 3-year, 6% bonds pay interest each year on December 31. Miller incurred $40,000 in bond issue costs and records transactions using IFRS.
Required:
1. Compute the effective interest rate of the bond issue.
2. Prepare the journal entry to record the bond issuance.

Question

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The Answer of Miller, Inc. sold $1,000,000 of bonds at par on January 1, 2018. The 3-year, 6% bonds pay interest each year on December 31. Miller incurred $40,000 in bond issue costs and records transactions using IFRS.
Required:
1. Compute the effective interest rate of the bond issue.
2. Prepare the journal entry to record the bond issuance.