5 2.Downing Company issues $1,000,000, 8%, 10-year bonds on January 1, 2020. The bondspay interest semiannually on June 30 and December 31. The bonds are issued to yield 10%.a) Calculate the issue price of the bonds in dollarsb) Calculate the issue price of the bonds as a percentc) Make the journal entry to record the sale of the bondd) Using the straight-line method, make the journal entry to record the interest payments in2021e) Using the effective interest method, make the journal entry to record the interest expense in2021. Prepare the amortization table for 2020, 2021 and 2022.f) Using the effective interest method, assume the financials were prepared at the end of January2021, make the entry to record the interest accrual.g) Using the effective interest method, make the entry to buy back the bond on December 31,2021 at the different prices below:(i) $1,500,000(ii) $500,000

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2. Downing Company issues $1,000,000, 8%, 10-year bonds on January 1, 2020. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 10%. a) Calculate the issue price of the bonds in dollars b) Calculate the issue price of the bonds as a percent c) Make the journal entry to record the sale of the bond

2. Downing Company issues $1,000,000, 8%, 10-year bonds on January 1, 2020. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 10%. a) Calculate the issue price of the bonds in dollars b) Calculate the issue price of the bonds as a percent c) Make the journal entry to record the sale of the bond

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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