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Magic Company Issued $500,000, 8%, 10-Year Bonds on December

Question 145

Essay

Magic Company issued $500,000, 8%, 10-year bonds on December 31, 2017, for $470,000. Interest is payable annually on December 31. Magic uses the straight-line method of amortization and has a calendar year end.
Instructions
Prepare the appropriate journal entries on
(a) December 31, 2017.
(b) December 31, 2018.

Correct Answer:

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