On January 1, 2015, Loop Raceway issued 600 bonds, each with a face value of $1,000, a statedinterest rate of 5% paid annually on December 31, and a maturity date of December 31, 2017. Onthe issue date, the market interest rate was 6 percent, so the total proceeds from the bond issuewere $583,950. Loop uses the straight-line bond amortization method and adjusts for any roundingerrors when recording interest in the final year.Required:1. Prepare a bond amortization schedule.2. Give the journal entry to record the bond issue.3. Give the journal entries to record the interest payments on December 31, 2015 and 2016.4. Give the journal entry to record the interest and face value payment on December 31, 2017.5. Assume the bonds are retired on January 1, 2017, at a price of 98. Give the journal entries torecord the bond retirement.
On January 1, 2015, Loop Raceway issued 600 bonds, each with a face value of $1,000, a stated
interest rate of 5% paid annually on December 31, and a maturity date of December 31, 2017. On
the issue date, the market interest rate was 6 percent, so the total proceeds from the bond issue
were $583,950. Loop uses the
errors when recording interest in the final year.
Required:
1. Prepare a bond amortization schedule.
2. Give the
3. Give the journal entries to record the interest payments on December 31, 2015 and 2016.
4. Give the journal entry to record the interest and face value payment on December 31, 2017.
5. Assume the bonds are retired on January 1, 2017, at a price of 98. Give the journal entries to
record the bond retirement.
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