Oriole Company issued $760,000, 7%, 10-year bonds on January 1, 2022, for $815,933. This price resulted in an effective-interest rate of 6% on the bonds. Interest is payable annually on January 1. Oriole uses the effective-interest method to amortize bond premium or discount.

Oriole Company issued $760,000, 7%, 10-year bonds on January 1, 2022, for $815,933. This price resulted in an effective-interest rate of 6% on the bonds. Interest is payable annually on January 1. Oriole uses the effective-interest method to amortize bond premium or discount.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EB: Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market...

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Owe

Oriole Company issued $760,000, 7%, 10-year bonds on January 1, 2022, for $815,933. This price resulted in an effective-interest
rate of 6% on the bonds. Interest is payable annually on January 1. Oriole uses the effective-interest method to amortize bond
premium or discount.

Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is
entered. Do not indent manually.)
Date
Jan. 1,
2022
Account Titles and Explanation
Debit
Credit

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