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Question
On August 1, Clayton Co. issued $1,300,000 of 9%, 20-year bonds, dated August 1, for $1,225,000. Interest is payable semiannually on February 1 and August 1. The fiscal year of the company is the calendar year. Journalize the following transactions for the current year:
a. Issuance of the bonds.
b. Accrual of interest on December 31 and amortization of the bond discount for the first year using the straight-line method (as separate entries). Round to the nearest dollar when necessary.
Answer
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