Bonds Accounted For Under The Effective Method On July 31, 2013, Camelot Castle

ID: 2478628 • Letter: B

Question

Bonds Accounted For Under The Effective Method

On July 31, 2013, Camelot Castle Resorts issues a $2,500,000, 10 year, 3.5% Bond with interest payable semiannually on January 31 and July 31 of each year. The market interest rate on the date of issuance is 6%. Camelot Castle Resorts uses the effective interest method to amortize bonds.

1.) Calculate the issuance price of the bond using the appropriate present value tables attached.

2.) Prepare the entry to account for the Bond Issuance on July 31, 2013.

Template If Needed:

Periods

Beginning Bonds Issue Balance

Interest Expense

Bond Interest Payments

Amortization of Bond Premium or

Discount

Ending Bond Issue Balance

31-Jan-14

31-Jul-14

31-Jan-15

31-Jul-15

31-Jan-16

31-Jul-16

31-Jan-17

31-Jul-17

31-Jan-18

31-Jul-18

31-Jan-19

31-Jul-19

31-Jan-20

31-Jul-20

31-Jan-21

31-Jul-21

31-Jan-22

31-Jul-22

31-Jan-23

31-Jul-23

3.) Prepare the journal entries that Camelot Castle Resorts would record on December 31, 2013; January 31, 2014; July 31, 2014; and July 31, 2023.[Please make use of the amortization table to help determine the balances needed in these various journal entries.] December 31, 2013

January 31, 2014

July 31, 2014

July 31, 2023 - This Is The Date The Bond Matures {Be Careful}