Mitchell Inc. issued 40, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1, and December 31, and were issued to yield 7%. Debt issuance costs were $800. The bonds mature December 31, 2022, and the company uses the effective interest method to amortize bond discounts and debt issuance costs. Required a. Determine the selling price of the bonds, net of debt issuance costs. Round to the nearest dollar. b. Prepare an amortization schedule for the full bond term. c. Prepare journal entries on the following dates. 1. January 1, 2020, bond issuance. b. 2. July 1, 2020, interest payment. 3. December 31, 2020, interest payment. Bond Selling Price Amortization Schedule Journal Entries

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Mitchell Inc. issued 40, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each
July 1, and December 31, and were issued to yield 7%. Debt issuance costs were $800. The bonds mature
December 31, 2022, and the company uses the effective interest method to amortize bond discounts and debt
issuance costs.
Required
a. Determine the selling price of the bonds, net of debt issuance costs. Round to the nearest dollar.
b. Prepare an amortization schedule for the full bond term.
c. Prepare journal entries on the following dates.
1. January 1, 2020, bond issuance.
2. July 1, 2020, interest payment.
3. December 31, 2020, interest payment.
Bond Selling Price Amortization Schedule Journal Entries
b.
• Note: Round amounts in schedule to the nearest whole dollar. Use rounded amounts for later calculations
in the schedule.
• Note: Include any net rounding difference for Bond Payable, Net in the interest expense amount for Dec.
31, 2022.
Date
Jan. 1, 2020
July 1, 2020
Dec. 31, 2020
July 1, 2021
Dec. 31, 2021
July 1, 2022
Dec. 31, 2022
$
Cash Interest Expense Discount Amortization Bonds Payable, Net
$
0
0
0
0 $
0
0
0
0
0
0 $
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Transcribed Image Text:Mitchell Inc. issued 40, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1, and December 31, and were issued to yield 7%. Debt issuance costs were $800. The bonds mature December 31, 2022, and the company uses the effective interest method to amortize bond discounts and debt issuance costs. Required a. Determine the selling price of the bonds, net of debt issuance costs. Round to the nearest dollar. b. Prepare an amortization schedule for the full bond term. c. Prepare journal entries on the following dates. 1. January 1, 2020, bond issuance. 2. July 1, 2020, interest payment. 3. December 31, 2020, interest payment. Bond Selling Price Amortization Schedule Journal Entries b. • Note: Round amounts in schedule to the nearest whole dollar. Use rounded amounts for later calculations in the schedule. • Note: Include any net rounding difference for Bond Payable, Net in the interest expense amount for Dec. 31, 2022. Date Jan. 1, 2020 July 1, 2020 Dec. 31, 2020 July 1, 2021 Dec. 31, 2021 July 1, 2022 Dec. 31, 2022 $ Cash Interest Expense Discount Amortization Bonds Payable, Net $ 0 0 0 0 $ 0 0 0 0 0 0 $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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