Assignment - Chapter 14 Bond Amortization Table A company issued 10%, 10-year bo
ID: 2337022 • Letter: A
Question
Assignment - Chapter 14 Bond Amortization Table A company issued 10%, 10-year bonds with a par value of $1,000,000 on January 1, 2009 at a selling price of $885,295, to yield the buyers a 12% return. The company uses the effective interest amortization method. Interest is paid semiannually each June 30 and December 31. Required 1. Refer to Appendix B on page 608 and prepare an amortization table for the first two payment periods. 2. Prepare the journal entry to record the first semiannual interest payment and amortization Assignment - Chapter 14 Bond Amortization Table A company issued 10%, 10-year bonds with a par value of $1,000,000 on January 1, 2009 at a selling price of $885,295, to yield the buyers a 12% return. The company uses the effective interest amortization method. Interest is paid semiannually each June 30 and December 31. Required 1. Refer to Appendix B on page 608 and prepare an amortization table for the first two payment periods. 2. Prepare the journal entry to record the first semiannual interest payment and amortizationExplanation / Answer
Year 1
A)Interest Cost A/C – Dr 53117.7
To 12% bonds A/C – 53117.7
B) 12% bonds A/C- Dr – 50000
To Cash A/C – 50000
C) Interest Cost A/C – Dr 53304.76
To 12% bonds A/C – 53304.76
D) 12% bonds A/C- Dr – 50000
To Cash A/C – 50000
E) Profit and Loss A/C – Dr 53117.7+ 53304.76= 106422.5
To Interest A/C - 53117.7+ 53304.76=106422.5
Best Of luck,
Regards.
Chegg Team.
Year Rate Interest Value Installement Final Value 0 885295 - 885295 1 First Half 6% 53117.7 938412.7 50000 888412.7 Second Half 6% 53304.76 941717.5 50000 891717.462 2 First Half 6% 53503.05 945220.5 50000 895220.51 Second Half 6% 53713.23 948933.7 50000 898933.74 3 First Half 6% 53936.02 952869.8 50000 902869.765 Second Half 6% 54172.19 957042 50000 907041.951 4 First Half 6% 54422.52 961464.5 50000 911464.468 Second Half 6% 54687.87 966152.3 50000 916152.336