Question 3: On July 1, 2010, Wheeler Satellites issued $4,500,000 face value, 9%, 10-year bonds at $4,219,600.This price resulted in an effective-interest rate of 10% on the bonds. Wheeler uses the effective-interest method to amortize bond premium or discount. The bonds pay semi-annual interest July 1 and January 1. Required: (Round all computations to the nearest dollar.) (a) Prepare the journal entry to record the issuance of the bonds on July 1, 2010. (b) Prepare an amortization table through December 31, 2011 (3 interest periods) for this bond issue. (c) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2010. (d) Prepare the journal entry to record the payment of interest and the amortization of the discount on July 1, 2011, assuming that interest was not accrued on June 30. (e) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2011.

Question 3: On July 1, 2010, Wheeler Satellites issued $4,500,000 face value, 9%, 10-year bonds at $4,219,600.This price resulted in an effective-interest rate of 10% on the bonds. Wheeler uses the effective-interest method to amortize bond premium or discount. The bonds pay semi-annual interest July 1 and January 1. Required: (Round all computations to the nearest dollar.) (a) Prepare the journal entry to record the issuance of the bonds on July 1, 2010. (b) Prepare an amortization table through December 31, 2011 (3 interest periods) for this bond issue. (c) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2010. (d) Prepare the journal entry to record the payment of interest and the amortization of the discount on July 1, 2011, assuming that interest was not accrued on June 30. (e) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2011.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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