P10-10A
Prepare journal entries to record issuance of bonds , payment of interest , and amortization of bond discount using effective interest method .
On January 1 , 2014 , Lock Corporation |
issued |
$ 1,800,000 |
face |
value , |
5 % |
|
10 |
-year bonds at |
$ 1,667,518 |
This price resulted in an effective-interest rate of |
6 % on the bonds . Lock uses the effective-interest method to amortize bond premium or
discount . The bonds pay annual interest January 1 .
Instructions : ( Round all computations to the nearest dollar .)