Polk Incorporated issued $231,000 of 11% bonds on July 1, 2019, for $239,209.53. The bonds were dated January 1, 2019, pay interest on each June 30 and December 31, are due December 31, 2020, and were issued to yield 10%. Polk uses the effective interest method of amortization. Required: Prepare the journal entries to record the issue of the bonds on July 1, 2019, and the interest payments on December 31, 2019, and June 30, 2020. In addition, prepare a bond interest expense and premium amortization schedule for the bonds through June 30, 2020.
Polk Incorporated issued $231,000 of 11% bonds on July 1, 2019, for $239,209.53. The bonds were dated January 1, 2019, pay interest on each June 30 and December 31, are due December 31, 2020, and were issued to yield 10%. Polk uses the effective interest method of amortization. Required: Prepare the journal entries to record the issue of the bonds on July 1, 2019, and the interest payments on December 31, 2019, and June 30, 2020. In addition, prepare a bond interest expense and premium amortization schedule for the bonds through June 30, 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Polk Incorporated issued $231,000 of 11% bonds on July 1, 2019, for $239,209.53. The bonds were dated January 1, 2019, pay interest on each June 30 and December 31, are due December 31, 2020, and were issued to yield 10%. Polk uses the effective interest method of amortization.
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Amortization Schedule:- It is a statement prepared for the premium and discount over the investment actual amount and payment made with effective interest rate get distributed among the number of payments.
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