In the following two independent cases, the company closes its books on December 31: 1. Splish Brothers Inc. sells $ 2.16 million of 8% bonds on March 1, 2020. The bonds pay interest on September 1 and March 1. The bonds’ due date is September 1, 2023. The bonds yield 10%. 2. Buffalo Ltd. sells $ 6.20 million of 9% bonds on June 1, 2020. The bonds pay interest on December 1 and June 1. The bonds’ due date is June 1, 2024. The bonds yield 8%. On October 1, 2021, Buffalo buys back $ 1.24 million worth of bonds for $ 2.11million, including accrued interest. For situation 1, use the effective interest method for discount and premium amortization and prepare any necessary amortization tables. (Hint: Refer to Chapter 3 for tips on calculating.) (Round answers to 0 decimal places, e.g. 5,275.) For situation 2, use the effective interest method for discount and premium amortization and prepare any necessary amortization tables. (Hint: Refer to Chapter 3 for tips on calculating.) (Round answers to 0 decimal places, e.g. 5,275.)
In the following two independent cases, the company closes its books on December 31:
| 1. | Splish Brothers Inc. sells $ 2.16 million of 8% bonds on March 1, 2020. The bonds pay interest on September 1 and March 1. The bonds’ due date is September 1, 2023. The bonds yield 10%. | |
| 2. |
Buffalo Ltd. sells $ 6.20 million of 9% bonds on June 1, 2020. The bonds pay interest on December 1 and June 1. The bonds’ due date is June 1, 2024. The bonds yield 8%. On October 1, 2021, Buffalo buys back $ 1.24 million worth of bonds for $ 2.11million, including accrued interest.
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