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Recording Bond Entries and Preparing an Amortization Schedule-Debt Issuance Costs

Recording Bond Entries and Preparing an Amortization Schedule-Debt Issuance Costs

FINANCIAL ACCOUNTING
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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Recording Bond Entries and Preparing an Amortization Schedule-Debt Issuance Costs
Recording Bond Entries and Preparing an Amortization Schedule-Debt Issuance Costs Mitchell Inc. issued 120, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each july 1, and December 31, and were issued to yield 7%. Debt issuance costs were $2.400 The bonds mature December 31, 2022, and the company uses the effective interest method to amortize bond discounts and debt issuance costs Required a. Determine the selling price of the bonds, net of debt issuance costs. Round to the nearest dollar. b. Prepare an amortization schedule for the full bond term c. Prepare journal entries on the following dates. 1. January 1, 2020, bond issuance. 2. July 1, 2020, interest payment. 3. December 31, 2020, interest payment. Bond Selling Price Amortization Schedule Selling price of bonds Check Journal Entries
Transcribed Image Text:Recording Bond Entries and Preparing an Amortization Schedule-Debt Issuance Costs Mitchell Inc. issued 120, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each july 1, and December 31, and were issued to yield 7%. Debt issuance costs were $2.400 The bonds mature December 31, 2022, and the company uses the effective interest method to amortize bond discounts and debt issuance costs Required a. Determine the selling price of the bonds, net of debt issuance costs. Round to the nearest dollar. b. Prepare an amortization schedule for the full bond term c. Prepare journal entries on the following dates. 1. January 1, 2020, bond issuance. 2. July 1, 2020, interest payment. 3. December 31, 2020, interest payment. Bond Selling Price Amortization Schedule Selling price of bonds Check Journal Entries
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