Question

On 7/1/16, ABC sold 10% bonds having a maturity value of $700,000 for $756,773.50, resulting in an effective yield of 8%. The bonds are | ||||||||||

dated 7/1/16, and mature 7/1/21. Interest is payable semiannually on July 1 and January 1. ABC uses the effective interest method of | ||||||||||

amortization for bond premium or discount. Record the adjusting entry for the accrual of interest and the related amortization on 12/31/16. | ||||||||||

Hint: Develop an abbreviated amortization schedule to accurately determine the interest expense. Create journal entry |

Answer #1

Sage Company sells 8% bonds having a maturity value of
$2,510,000 for $2,319,700. The bonds are dated January 1, 2020, and
mature January 1, 2025. Interest is payable annually on January
1.
Determine the effective-interest rate. (Round answer
to 0 decimal places, e.g. 18%.)
The effective-interest rate
%
Set up a schedule of interest expense and discount amortization
under the effective-interest method.

On January 1, 2020, Pearl Company sold 11% bonds having a
maturity value of $600,000 for $622,744, which provides the
bondholders with a 10% yield. The bonds are dated January 1, 2020,
and mature January 1, 2025, with interest payable December 31 of
each year. Pearl Company allocates interest and unamortized
discount or premium on the effective-interest basis.
Prepare the journal entry at the date of the bond issuance.

On January 1, 2020, Ivanhoe Company sold 12% bonds having a
maturity value of $400,000 for $430,326, which provides the
bondholders with a 10% yield. The bonds are dated January 1, 2020,
and mature January 1, 2025, with interest payable December 31 of
each year. Ivanhoe Company allocates interest and unamortized
discount or premium on the effective-interest basis.
(a) Prepare the journal entry at the date of the bond
issuance

Waterway Company sells 10% bonds having a maturity value of
$2,200,000 for $2,118,688. The bonds are dated January 1, 2017, and
mature January 1, 2022. Interest is payable annually on January
1.
Determine the effective-interest rate. (Round answer to 0 decimal
places, e.g. 18%.)
The effective-interest rate
10
%
LINK TO TEXT
Set up a schedule of interest expense and discount amortization
under the effective-interest method. (Round intermediate
calculations to 6 decimal places, e.g. 1.251247 and final...

Pearl Company sells 9% bonds having a maturity value of
$1,800,000 for $1,731,764. The bonds are dated January 1, 2017, and
mature January 1, 2022. Interest is payable annually on January
1.
a) Determine the effective-interest rate.
The effective-interest rate _______%
b) Set up a schedule of interest expense and
discount amortization under the effective-interest method.
Schedule of Discount Amortization
Effective Interest Method
Year
Cash Paid
Interest Expense
Discount Amortized
Carrying amount of bonds
Jan. 1, 2017
Jan. 1, 2018...

Pearl Company sells 9% bonds having a maturity value of
$1,800,000 for $1,731,764. The bonds are dated January 1, 2017, and
mature January 1, 2022. Interest is payable annually on January
1.
a) Determine the effective-interest rate.
The effective-interest rate _______%
b) Set up a schedule of interest expense and
discount amortization under the effective-interest method.
Schedule of Discount Amortization
Effective Interest Method
Year
Cash Paid
Interest Expense
Discount Amortized
Carrying amount of bonds
Jan. 1, 2017
Jan. 1, 2018...

On January 1, 2020, Sweet Company sold 11% bonds having a
maturity value of $900,000 for $934,116, which provides the
bondholders with a 10% yield. The bonds are dated January 1, 2020,
and mature January 1, 2025, with interest payable December 31 of
each year. Sweet Company allocates interest and unamortized
discount or premium on the effective-interest basis.
Prepare the journal entry at the date of the bond issuance.
(Round answer to 0 decimal places, e.g. 38,548. If no
entry...

Cheyenne Company sells 8% bonds having a maturity value of
$2,400,000 for $2,218,040. The bonds are dated January 1, 2020, and
mature January 1, 2025. Interest is payable annually on January
1.
Determine the effective-interest rate. (Round answer
to 0 decimal places, e.g. 18%.)
The effective-interest rate
%
eTextbook and Media
Set up a schedule of interest expense and discount amortization
under the effective-interest method. (Round
intermediate calculations to 5 decimal places, e.g. 1.25124 and
final answer to...

Larkspur Company sells 8% bonds having a maturity value of
$2,000,000 for $1,848,366. The bonds are dated January 1, 2020, and
mature January 1, 2025. Interest is payable annually on January
1.
Determine the effective-interest rate. (Round answer
to 0 decimal places, e.g. 18%.)
The effective-interest rate
Set up a schedule of interest expense and discount amortization
under the effective-interest method. (Round
intermediate calculations to 5 decimal places, e.g. 1.25124 and
final answer to 0 decimal places, e.g. 38,548.)...

Novak Company sells 8% bonds having a maturity value of
$3,170,000 for $2,929,660. The bonds are dated January 1, 2020, and
mature January 1, 2025. Interest is payable annually on January
1.
Determine the effective-interest rate. (Round answer
to 0 decimal places, e.g. 18%.)
The effective-interest rate
%
Set up a schedule of interest expense and discount amortization
under the effective-interest method. (Round
intermediate calculations to 5 decimal places, e.g. 1.25124 and
final answer to 0 decimal places,...

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