Harriman Company authorized a $1,000,000, 10-year, 6% bond issue dated January 1, 2016, when the market rate was 8%. Annual interest will be paid each December 31. On January 1, 2016, the bonds were issued for $866,000. Harriman Company has a December 31 year-end.
Required:
A.Prepare the journal entry to record the sale of the bonds.
B.Prepare the required journal entry on December 31, 2016 to record amortization using the effective interest method.No adjusting journal entries were made during the year.
C.Was the bond issued at par, at a discount, or at a premium?
D.Will interest expense over the life of the bond be greater than, or less than, the total cash payment for interest over the life of the bond?

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The Answer of Harriman Company authorized a $1,000,000, 10-year, 6% bond issue dated January 1, 2016, when the market rate was 8%. Annual interest will be paid each December 31. On January 1, 2016, the bonds were issued for $866,000. Harriman Company has a December 31 year-end.
Required:
A.Prepare the journal entry to record the sale of the bonds.
B.Prepare the required journal entry on December 31, 2016 to record amortization using the effective interest method.No adjusting journal entries were made during the year.
C.Was the bond issued at par, at a discount, or at a premium?
D.Will interest expense over the life of the bond be greater than, or less than, the total cash payment for interest over the life of the bond?

Harriman Company Authorized a $1,000,000, 10-Year, 6% Bond Issue Dated