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Sheridan Company issued $6,500,000 of 6%, 10-year bonds for $5,614,000. The straight line method of amortization is to be used. The journal entry to be recorded at the end of each year to record the accrued interest and the amortization of discount will include a

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Answer:

The solution of the given query is explained throughout the segment below.

Explanation:

The given values are:

Company issued amount,

= $6,500,000

Rate of interest,

= 6%

Time,

= 10 years

Now,

On bonds payable amortization, the discount will be:

= [tex]\frac{6,500,000 -5,614,000}{10}[/tex]

= [tex]\frac{886,000}{10}[/tex]

= [tex]88,600[/tex] ($)

Interest expenses will be:

= [tex](6,500,000\times 6 \ percent) + 88,600[/tex]

= [tex]390,000+88,600[/tex]

= [tex]478,600[/tex] ($)

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