Recording Bond Entries and Preparing an Amortization Schedule-Debt Issuance Costs
Chapter1: Financial Statements And Business Decisions
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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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F51120f8b-423d-449a-b4ce-6e3730f9b3ae%2Fabc6231b-cc10-4df1-abad-83d96608a130%2Fermiaud_processed.jpeg&w=3840&q=75)
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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