Question

On 7/1/16, ABC sold 10% bonds having a maturity value of $700,000 for $756,773.50, resulting in...

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
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2020, Swifty Company purchased 8% bonds having a maturity value of $280,000, for...
On January 1, 2020, Swifty Company purchased 8% bonds having a maturity value of $280,000, for $303,589.66. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Swifty Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry at the date of the bond purchase. Prepare a bond...
On January 1, 2020, Pearl Company sold 11% bonds having a maturity value of $600,000 for...
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...
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
Sage Company sells 8% bonds having a maturity value of $2,510,000 for $2,319,700. The bonds are...
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.
Pearl Company sells 9% bonds having a maturity value of $1,800,000 for $1,731,764. The bonds are...
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...
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...
Waterway Company sells 10% bonds having a maturity value of $2,200,000 for $2,118,688. The bonds are...
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...
On January 1, 2020, Sweet Company sold 11% bonds having a maturity value of $900,000 for...
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...
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...
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.)...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT