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Recording Bond Entries and Preparing an Amortization Schedule—Effective Interest Method, Discount, Interest Accrual Mitchell Inc. issued 128, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1, and January 1, and were issued to yield 7%. The bonds mature January 1, 2023, and the company uses the effective interest method to amortize bond discounts or premiums. Required  a. Determine the selling price of the bonds. Round amount 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 accrual.  4. January 1, 2021, interest payment.

Recording Bond Entries and Preparing an Amortization Schedule—Effective Interest Method, Discount, Interest Accrual Mitchell Inc. issued 128, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1, and January 1, and were issued to yield 7%. The bonds mature January 1, 2023, and the company uses the effective interest method to amortize bond discounts or premiums. Required  a. Determine the selling price of the bonds. Round amount 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 accrual.  4. January 1, 2021, interest payment.

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—Effective Interest Method, Discount, Interest Accrual

Mitchell Inc. issued 128, 6%, $1,000 bonds on January 1, 2020. The bonds pay cash interest semiannually each July 1, and January 1, and were issued to yield 7%. The bonds mature January 1, 2023, and the company uses the effective interest method to amortize bond discounts or premiums.

Required 

a. Determine the selling price of the bonds. Round amount 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 accrual. 

4. January 1, 2021, interest payment.

С. • Note: List multiple debits or credits (when applicable) in alphabetical order. • Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Cr. 1. Jan. 1, 2020 2. Jul. 1, 2020 3. Dec. 31, 2020
Transcribed Image Text:С. • Note: List multiple debits or credits (when applicable) in alphabetical order. • Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Cr. 1. Jan. 1, 2020 2. Jul. 1, 2020 3. Dec. 31, 2020
b. • Note: Round amounts in schedule to the nearest whole dollar. Use rounded amounts for later calculations in the schedule. • Note: Include any net rounding difference for Bond Payable, Net in the interest expense amount for Dec. 31, 2022. Date Cash Interest Expense Discount Amortization Bonds Payable, Net Jan. 1, 2020 $ July 1, 2020 2$ 2$ $ Dec. 31, 2020 July 1, 2021 Dec. 31, 2021 July 1, 2022 Dec. 31, 2022 Total $ 2$ 2$
Transcribed Image Text:b. • Note: Round amounts in schedule to the nearest whole dollar. Use rounded amounts for later calculations in the schedule. • Note: Include any net rounding difference for Bond Payable, Net in the interest expense amount for Dec. 31, 2022. Date Cash Interest Expense Discount Amortization Bonds Payable, Net Jan. 1, 2020 $ July 1, 2020 2$ 2$ $ Dec. 31, 2020 July 1, 2021 Dec. 31, 2021 July 1, 2022 Dec. 31, 2022 Total $ 2$ 2$
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