Recording Entries for TS—Effective Interest Method Adjust FVA at Year-End On July 1, 2020, West Company purchased for cash, fifteen $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Amortization Schedule Journal Entries in 2020 Journal Entries in 2021 a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method. Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Adjust market interest in the final year of the bond term for any net rounding difference. Date Stated Interest Market Interest Discount Amortization Bond Amortized Cost Jul. 1, 2020 Answer Jan. 1, 2021 Answer Answer Answer Answer Jul. 1, 2021 Answer Answer Answer Answer Jan. 1, 2022 Answer Answer Answer Answer Jul. 1, 2022 Answer Answer Answer Answer Jan. 1, 2023 Answer Answer Answer Answer Jul. 1, 2023 Answer Answer Answer Answer Total Answer Answer Answer
Recording Entries for TS—Effective Interest Method Adjust FVA at Year-End On July 1, 2020, West Company purchased for cash, fifteen $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes. Amortization Schedule Journal Entries in 2020 Journal Entries in 2021 a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method. Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Adjust market interest in the final year of the bond term for any net rounding difference. Date Stated Interest Market Interest Discount Amortization Bond Amortized Cost Jul. 1, 2020 Answer Jan. 1, 2021 Answer Answer Answer Answer Jul. 1, 2021 Answer Answer Answer Answer Jan. 1, 2022 Answer Answer Answer Answer Jul. 1, 2022 Answer Answer Answer Answer Jan. 1, 2023 Answer Answer Answer Answer Jul. 1, 2023 Answer Answer Answer Answer Total Answer Answer Answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Recording Entries for TS—Effective Interest Method
Adjust FVA at Year-End
On July 1, 2020, West Company purchased for cash, fifteen $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes.
- Amortization Schedule
Journal Entries in 2020- Journal Entries in 2021
a. Prepare a bond amortization schedule for the life of the bonds using the effective interest method.
Note: Round each amount entered into the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Adjust market interest in the final year of the bond term for any net rounding difference.
| Date | Stated Interest |
Market Interest |
Discount Amortization |
Bond Amortized Cost |
|---|---|---|---|---|
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