On June 1 2006 jay bottle company sold 400000 in long term bonds for 351040. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10% the bonds pay interest annually on May 31 each year. The bonds are to be accounted for under the effective interest method.
a- construct a bond amortization table for this problem to indicate the amount of interest expenses and discount amortization at each May 31. Include only the first four years.
b-assuming that interest and discount amortization are recorded each May 31, prepare the adjusting entry to be made on Dec 31 2008.