On January 1, 2010, when the market interest rate was 9 percent, Seton Corporati

Question

On January 1, 2010, when the market interest rate was 9 percent, Seton Corporation completed a $210,000, 8 percent bond issue for 196,521. The bonds were dated January 1, 2010, pay interest each December 31, and mature 10 years from December 31, 2019. Assume Seton Corporation uses the effective-interest method to amortize the bond discount. Requirement 1: Prepare the journal entry to record the bond issuance. (Omit the "$" sign in your response.) Requirement 2: Prepare the journal entry to record the interest payment on December 31, 2010. (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

Explanation / Answer

Jan. 1, 2010

DR Cash    196,521
DR Discount on B/P 13,479
                   CR B/P                 210,000

Dec. 31, 2010

DR Interest Expense                                15,452.1
                   CR Disc. on B/P                   1,347.9
                   CR Cash/Interest Payable                 16,800

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