Problem solving question: Bonds Payable (CLO #2) O'Malley Company issued $800,000 of 8% bonds on January 1, 2021 for $785,124 due on December 31, 2024. The interest is to be paid twice a year on December 31 and June 30. The bonds were sold to yield 10% effective annual interest. O'Malley Company closes its books annually on December 31. Instructions: (a) Complete the amortization schedule for the period from January 1, 2021 to December 31, 2021. (Round all answers to the nearest dollar.) Use the effective-interest method. Date January 1, 2021 June 30, 2021 Dec 31, 2021 Cash Paid Int. Exp. Amortization Carrying Amount (b) Prepare the adjusting entry for December 31, 2021. Use the effective-interest method. (c) Compute the interest expense to be reported in the income statement for the year ended Decembe 31, 2021.
Problem solving question: Bonds Payable (CLO #2) O'Malley Company issued $800,000 of 8% bonds on January 1, 2021 for $785,124 due on December 31, 2024. The interest is to be paid twice a year on December 31 and June 30. The bonds were sold to yield 10% effective annual interest. O'Malley Company closes its books annually on December 31. Instructions: (a) Complete the amortization schedule for the period from January 1, 2021 to December 31, 2021. (Round all answers to the nearest dollar.) Use the effective-interest method. Date January 1, 2021 June 30, 2021 Dec 31, 2021 Cash Paid Int. Exp. Amortization Carrying Amount (b) Prepare the adjusting entry for December 31, 2021. Use the effective-interest method. (c) Compute the interest expense to be reported in the income statement for the year ended Decembe 31, 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
G.203.
Transcribed Image Text:Problem solving question: Bonds Payable
(CLO #2)
O'Malley Company issued $800,000 of 8% bonds on January 1, 2021 for $785,124 due on December 31,
2024. The interest is to be paid twice a year on December 31 and June 30. The bonds were sold to yield 10%
effective annual interest. O'Malley Company closes its books annually on December 31.
Instructions:
(a) Complete the amortization schedule for the period from January 1, 2021 to December 31, 2021.
(Round all answers to the nearest dollar.) Use the effective-interest method.
Date
January 1, 2021
June 30, 2021
Dec 31, 2021
Cash Paid
Int. Exp.
Amortization
Carrying Amount
(b) Prepare the adjusting entry for December 31, 2021. Use the effective-interest method.
(c) Compute the interest expense to be reported in the income statement for the year ended Decembe
31, 2021.
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