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Untitled Document31 - payable account. As with the...

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General Journal Date Account Title and Description Ref. Debit Credit Dec. 31 Interest Expense ($9,377 × 10% × 6 / 12 ) 469 Discount on Bonds Payable 19 Cash ($ 10,000 × 9% × 6 / 12 ) 450 Pay semiannual interest using interest method of amortization As the discount is amortized, the discount on bonds payable account's balance  decreases and the carrying value of the bond increases. The amount of discount  amortized for the last payment is equal to the balance in the discount on bonds 
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Unformatted text preview: payable account. As with the straight-line method of amortization, at the maturity of the bonds, the discount account's balance will be zero and the bond's carrying value will be the same as its principal amount. for interest expense and carrying values over the life of the bond calculated using the effective interest method of amortization...
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This note was uploaded on 12/25/2011 for the course FIN 3312 taught by Professor Staff during the Spring '08 term at Texas State.

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