On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. Prepare entries to record the following transactions for the current fiscal year:
(a)Issuance of the bonds.
(b)Second semiannual interest payment.
(c)Amortization of bond premium for the first year, using the straight-line method of amortization.

Question

Quizplus · Accepted Answer

The Answer of On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. Prepare entries to record the following transactions for the current fiscal year:
(a)Issuance of the bonds.
(b)Second semiannual interest payment.
(c)Amortization of bond premium for the first year, using the straight-line method of amortization.

On the First Day of the Fiscal Year, Lisbon Co