Problem 14-3 (Algo) Straight-line and effective interest compared [LO14-2] On January 1, 2024, Reyes Recreational Products issued $100,000, 11%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $96,895 to yield an annual return of 12%. Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. 2. Prepare an amortization schedule by the straight-line method. 3. Prepare the journal entries to record interest expense on June 30, 2026, by each of the two approaches. 5. Assuming the market rate is still 12%, what price would a second investor pay the first investor on June 30, 2026, for $12,000 of the bonds? Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EMA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Problem 14-3 (Algo) Straight-line and effective interest compared [LO14-2] On January 1, 2024, Reyes Recreational Products issued $100,000, 11%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $96,895 to yield an annual return of 12%. Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. 2. Prepare an amortization schedule by the straight-line method. 3. Prepare the journal entries to record interest expense on June 30, 2026, by each of the two approaches. 5. Assuming the market rate is still 12%, what price would a second investor pay the first investor on June 30, 2026, for $12,000 of the bonds? Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EMA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject: accounting
![Problem 14-3 (Algo) Straight-line and effective interest compared [LO14-2]
On January 1, 2024, Reyes Recreational Products issued $100,000, 11%, four-year bonds. Interest is paid semiannually on June 30 and
December 31. The bonds were issued at $96,895 to yield an annual return of 12%.
Required:
1. Prepare an amortization schedule that determines interest at the effective interest rate.
2. Prepare an amortization schedule by the straight-line method.
3. Prepare the journal entries to record interest expense on June 30, 2026, by each of the two approaches.
5. Assuming the market rate is still 12%, what price would a second investor pay the first investor on June 30, 2026, for $12,000 of the
bonds?
Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EMA of $1. PVA of $1. EVAD of $1 and PVAD of $1)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8fc66754-dc05-453a-a4c8-c79196bcb5d1%2F5edef0df-2a88-44e5-a831-a77d04b83488%2Fhet0uj6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 14-3 (Algo) Straight-line and effective interest compared [LO14-2]
On January 1, 2024, Reyes Recreational Products issued $100,000, 11%, four-year bonds. Interest is paid semiannually on June 30 and
December 31. The bonds were issued at $96,895 to yield an annual return of 12%.
Required:
1. Prepare an amortization schedule that determines interest at the effective interest rate.
2. Prepare an amortization schedule by the straight-line method.
3. Prepare the journal entries to record interest expense on June 30, 2026, by each of the two approaches.
5. Assuming the market rate is still 12%, what price would a second investor pay the first investor on June 30, 2026, for $12,000 of the
bonds?
Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EMA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
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