Rock Company issued a $1,000,000 bond on January 1, 2016. The bond was dated January 1, 2016, had an 8% coupon rate, pays interest annually on December 31, and sold for $924,184 at a time when the market rate of interest was 10%. Rock uses the effective-interest method to account for its bonds.
Required:
Prepare the necessary journal entry for each of the following dates (assuming that no adjusting journal entries have been made during the year):
(a) January 1, 2016
(b) December 31, 2016
(c) December 31, 2017
Round the entry items to the nearest whole dollar amounts.

Question

Quizplus · Accepted Answer

The Answer of Rock Company issued a $1,000,000 bond on January 1, 2016. The bond was dated January 1, 2016, had an 8% coupon rate, pays interest annually on December 31, and sold for $924,184 at a time when the market rate of interest was 10%. Rock uses the effective-interest method to account for its bonds.
Required:
Prepare the necessary journal entry for each of the following dates (assuming that no adjusting journal entries have been made during the year):
(a) January 1, 2016
(b) December 31, 2016
(c) December 31, 2017
Round the entry items to the nearest whole dollar amounts.

Rock Company Issued a $1,000,000 Bond on January 1, 2016