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P4. Coyote sold 10,000 shares of $1,000 par value, 8%, 10-year debenture bonds on 1/1/2018. The...

P4. Coyote sold 10,000 shares of $1,000 par value, 8%, 10-year debenture bonds on 1/1/2018. The interests will be paid on 12/31 of each year. The market interest rate was 6% as of 1/1/2018. Coyote retired these bonds for $9,600,000 on 1/1/2020.

Instructions: prepare any necessary journal entries for the followings using the effective interest method.

  1. The issuance of the bonds on 1/1/2018.
  2. Interest expense accrued in 2018 and 2019.
  3. Retirement of the bonds on 1/1/2020.
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