Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise. Journalizing bond transactions using the effective-interest amortization method Journalize issuance of the bond and the first semiannual interest payment under each of the following three assumptions. The company amortizes bond premium and discount by the effective-interest amortization method. Explanations are not required. Seven-year bonds payable with the face value of $83,000 and stated interest rate of 10%, paid semiannually. The market rate of interest is 10°/o at issuance. The present value of the bonds at issuance is $83,000. The same bonds payable as in assumption 1, but the market interest rate is 16%. The present value of the bonds at issuance is $62,433. The same bonds payable as in assumption 1, but the market interest rate is 8%. The present value of the bonds at issuance is $91,727.
Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise. Journalizing bond transactions using the effective-interest amortization method Journalize issuance of the bond and the first semiannual interest payment under each of the following three assumptions. The company amortizes bond premium and discount by the effective-interest amortization method. Explanations are not required. Seven-year bonds payable with the face value of $83,000 and stated interest rate of 10%, paid semiannually. The market rate of interest is 10°/o at issuance. The present value of the bonds at issuance is $83,000. The same bonds payable as in assumption 1, but the market interest rate is 16%. The present value of the bonds at issuance is $62,433. The same bonds payable as in assumption 1, but the market interest rate is 8%. The present value of the bonds at issuance is $91,727.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise.
Journalizing bond transactions using the effective-interest amortization method
Journalize issuance of the bond and the first semiannual interest payment under each of the following three assumptions. The company amortizes bond premium and discount by the effective-interest amortization method. Explanations are not required.
- Seven-year bonds payable with the face value of $83,000 and stated interest rate of 10%, paid semiannually. The market rate of interest is 10°/o at issuance. The present
value of the bonds at issuance is $83,000. - The same bonds payable as in assumption 1, but the market interest rate is 16%. The present value of the bonds at issuance is $62,433.
- The same bonds payable as in assumption 1, but the market interest rate is 8%. The present value of the bonds at issuance is $91,727.
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