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A company issues 8%, two-year bonds on December 31, 2019, with a par value of $7,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 6%, which implies a selling price of 103.71 or $7,260. (a) Prepare an amortization table like Exhibit 14.11 for these bonds; use the straightline method to amortize the premium. Then prepare journal entries to record (b) the issuance of bonds on December 31, 2019; (c) the first through fourth interest payments on each June 30 and December 31; and (d) the maturity of the bonds on December 31, 2021.

A company issues 8%, two-year bonds on December 31, 2019, with a par value of $7,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 6%, which implies a selling price of 103.71 or $7,260. (a) Prepare an amortization table like Exhibit 14.11 for these bonds; use the straightline method to amortize the premium. Then prepare journal entries to record (b) the issuance of bonds on December 31, 2019; (c) the first through fourth interest payments on each June 30 and December 31; and (d) the maturity of the bonds on December 31, 2021.

FINANCIAL ACCOUNTING
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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A company issues 8%, two-year bonds on December 31, 2019, with a par value of $7,000 and semiannual
interest payments. On the issue date, the annual market rate for these bonds is 6%, which implies a selling
price of 103.71 or $7,260. (a) Prepare an amortization table like Exhibit 14.11 for these bonds; use the straightline
method to amortize the premium. Then prepare journal entries to record (b) the issuance of bonds on
December 31, 2019; (c) the first through fourth interest payments on each June 30 and December 31; and
(d) the maturity of the bonds on December 31, 2021.

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