A company issues 8%, two-year bonds on December 31, 2018, with a par value of $10,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 96.0% or $9,600. (a) Prepare an amortization table for these bonds; use the straight-line method to amortize the discount. Then prepare journal entries to record; (b) The issuance of bonds on December 31, 2018; (c) The first interest payments on each June 30 and December 31; and (d) The maturity of the bond on December 31, 2020.
A company issues 8%, two-year bonds on December 31, 2018, with a par value of $10,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 96.0% or $9,600. (a) Prepare an amortization table for these bonds; use the straight-line method to amortize the discount. Then prepare journal entries to record; (b) The issuance of bonds on December 31, 2018; (c) The first interest payments on each June 30 and December 31; and (d) The maturity of the bond on December 31, 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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A company issues 8%, two-year bonds on December 31, 2018, with a par value of $10,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 96.0% or $9,600.
(a) Prepare an amortization table for these bonds; use the straight-line method to amortize the discount. Then prepare journal entries to record;
(b) The issuance of bonds on December 31, 2018;
(c) The first interest payments on each June 30 and December 31; and
(d) The maturity of the bond on December 31, 2020.
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Step 1 Calculation Of discount and amortization of discount
VIEWStep 2 REQUIREMENT A - Amortization table for these bonds
VIEWStep 3 REQUIREMENT B- journal entries to record issuance of bonds on December 31, 2018;
VIEWStep 4 Requirement C - Journal entries for first interest payments on June 30 and December 31
VIEWStep 5 RequirementD - journal entries to record The maturity of the bond on December 31, 2020.
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