Question

Please show in excel.

On 1-1-2018 Avion, Inc. Sold Bonds with these particulars:

Face amt. of Bonds 375,000 Matures on 1-1-2028, in 10 yrs.

Stated annual rate of int. 8.75% Effective annual rate of interest 10.00%

Int. is paid every six months; 6-30, 12-31

Req. 1, Assume the effective Interest Method in accounting for these Bonds, build a 10 year amortization table

Req. 2, Give General Journal entries to record the sale of the bonds, and the 1st 4 interest payments

Answer 1

solution:

First of all issue price of bonds should be calculated:

Req. 1 Bond amortization table:

Journal entries:

Date	Account Titles	Debit	Credit
1-1-2018	Cash	$345,792
	Discount on bonds payable	$ 29,028
	Bonds payable		$375,000
6-30-2018	Interest Expense	$17,289
	Discount on bonds payable		$883
	Cash		$16,406

Repeat second journal entry for remaining 2 interest payment journal entry by taking figures from amortization table.