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
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe8276f06-c3ad-4934-bedb-202c9ab550cd%2F52a2e6eb-7ba1-486b-82f2-22c69b09e1ab%2Fve0z6jq_processed.png&w=3840&q=75)
![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$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe8276f06-c3ad-4934-bedb-202c9ab550cd%2F52a2e6eb-7ba1-486b-82f2-22c69b09e1ab%2Fc3j1iv_processed.png&w=3840&q=75)
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