(Solution) - On March 1 2010 Knap Corporation issued 1 200 000 of 6 -(2025 Original AI-Free Solution)

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On March 1, 2010, Knap Corporation issued $1,200,000 of 6 percent, five-years bonds. The semiannual interest payments dates are February 28 and August 31. Because the market rate for similar investments was 7 percent, the bonds had to be issued at a discount. The discount on the issuance of the bonds was $49,900. The company?s fiscal year ends February 28. Prepare entries in journal form to record the bond issue on March 1, 2010, the payment of interest, and the amortization of the discount on August 31, 2010 and on February 28, 2011. Use the effective interest method.