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Amortize premium by interest method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $20,000,000 of 5-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $21,622,179. Interest is payable semiannually. Shunda's fiscal year begins on January 1. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 88 Cash Interest Expense Bonds Payable Feedback Check My Work X 2. First semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Discount on Bonds Payable Discount on Bonds Payable Cash Feedback X X 000 000

Amortize premium by interest method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $20,000,000 of 5-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $21,622,179. Interest is payable semiannually. Shunda's fiscal year begins on January 1. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 88 Cash Interest Expense Bonds Payable Feedback Check My Work X 2. First semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Discount on Bonds Payable Discount on Bonds Payable Cash Feedback X X 000 000

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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Amortize premium by interest method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $20,000,000 of 5-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $21,622,179. Interest is payable semiannually. Shunda's fiscal year begins on January 1. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 88 Cash Interest Expense Bonds Payable Feedback Check My Work X 2. First semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Discount on Bonds Payable Discount on Bonds Payable Cash Feedback X X 000 000
Transcribed Image Text:Amortize premium by interest method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $20,000,000 of 5-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $21,622,179. Interest is payable semiannually. Shunda's fiscal year begins on January 1. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 88 Cash Interest Expense Bonds Payable Feedback Check My Work X 2. First semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Discount on Bonds Payable Discount on Bonds Payable Cash Feedback X X 000 000
3. Second semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Discount on Bonds Payable Discount on Bonds Payable X Feedback Check My Work As the discount or premium is amortized, the carrying amount of the bond changes. As a result, interest expense also changes each period. Compare the rate on the bonds and the market rate. b. Determine the bond interest expense for the first year. Round to the nearest dollar. Annual interest paid Less premium amortized Interest expense for first year Feedback Check My Work
Transcribed Image Text:3. Second semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Discount on Bonds Payable Discount on Bonds Payable X Feedback Check My Work As the discount or premium is amortized, the carrying amount of the bond changes. As a result, interest expense also changes each period. Compare the rate on the bonds and the market rate. b. Determine the bond interest expense for the first year. Round to the nearest dollar. Annual interest paid Less premium amortized Interest expense for first year Feedback Check My Work
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