On December 31, 2018, Kasznik, Inc., issued $720,000 of 11%, 10-year bonds for $678,708, yielding an effective interest rate of 12%. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the discount.
REQUIRED:
a. Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar.
b. Prepare the journal entries for
(1) The bond issuance on December 31, 2018
(2) To record bond interest expense and discount amortization at June 30, 2019
(3) To record bond interest expense and discount amortization at December 31, 2019.
c. Post the journal entries from part b to their respective T-accounts.
d. Record each of the transactions from part bin the financial statement effects template.
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