PART 1 Recording Entries for TS—Effective Interest Method Adjust FVA at Sale and Year-End On July 1, 2020, West Company purchased for cash, eighteen $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Amortization Schedule (PART 1) Journal Entries in 2020 Journal Entries in 2021 a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method. Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Adjust market interest in the final year of the bond term for any net rounding difference.
PART 1
Recording Entries for TS—Effective Interest Method
On July 1, 2020, West Company purchased for cash, eighteen $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes.
- Amortization Schedule (PART 1)
Journal Entries in 2020- Journal Entries in 2021
a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method.
Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Adjust market interest in the final year of the bond term for any net rounding difference.
Date | Stated Interest |
Market Interest |
Discount Amortization |
Bond Amortized Cost |
---|---|---|---|---|
Jul. 1, 2020 | Answer | |||
Jan. 1, 2021 | Answer | Answer | Answer | Answer |
Jul. 1, 2021 | Answer | Answer | Answer | Answer |
Jan. 1, 2022 | Answer | Answer | Answer | Answer |
Jul. 1, 2022 | Answer | Answer | Answer | Answer |
Jan. 1, 2023 | Answer | Answer | Answer | Answer |
Jul. 1, 2023 | Answer | Answer | Answer | Answer |
Totals | Answer | Answer | Answer |
![Recording Entries for TS–Effective Interest Method
Adjust FVA at Sale and Year-End
On July 1, 2020, West Company purchased for cash, eighteen $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds
are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes.
Amortization Schedule
Journal Entries in 2020
Journal Entries in 2021
a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method.
Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Adjust market interest in the final year of the bond term for any net rounding difference.
Stated
Market
Discount
Bond
Date
Interest
Interest
Amortization Amortized Cost
Jul. 1, 2020
$
Jan. 1, 2021 $
24
$
Jul. 1, 2021
Jan. 1, 2022
Jul. 1, 2022
Jan. 1, 2023
Jul. 1, 2023
Totals
$
$
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