Question: Woode Corporation issued $400,000, 7%, 20-year bonds on January 1, 2017, for $360,727. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1. Woode uses the effective-interest method to amortize bond premium or discount.
Instructions: Prepare the journal entries to record (round to the nearest dollar):
(a) The issuance of the bonds.
(b) The accrual of interest and the discount amortization on December 31, 2017.
(c) The payment of interest on January 1, 2018.