Rentokil Limited Bond Amortization Schedule Amount Jan 1 2011 Date Cash Interest unamortized Carrying Value 5.651 94.349 December 31 2011 11,000 11,322 5.329 94,671 December 31 2012 11,000 11,361 4.968 95,032 December 31 2013 11,000 11,404 4.564 95.436 December 31 2014 11,000 11,452 4,112 95.888 December 31 2015 11,000 11,507 3,605 96.395 December 31 2016 11,000 11,567 3.038 96,962 December 31 2017 11,000 11,635 2,403 97.597 December 31 2018 11,000 11,712 1,691 98,309 December 31 2019 11,000 11,797 894 99.106 December 31 2020 11,000 11,894 100,000 110,000 115,651
Rentokil Limited Bond Amortization Schedule Amount Jan 1 2011 Date Cash Interest unamortized Carrying Value 5.651 94.349 December 31 2011 11,000 11,322 5.329 94,671 December 31 2012 11,000 11,361 4.968 95,032 December 31 2013 11,000 11,404 4.564 95.436 December 31 2014 11,000 11,452 4,112 95.888 December 31 2015 11,000 11,507 3,605 96.395 December 31 2016 11,000 11,567 3.038 96,962 December 31 2017 11,000 11,635 2,403 97.597 December 31 2018 11,000 11,712 1,691 98,309 December 31 2019 11,000 11,797 894 99.106 December 31 2020 11,000 11,894 100,000 110,000 115,651
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
QUESTION 1
Rentokil Limited issued a 10-year bond on January 1 2011. It pays interest on January
1. The below amortization schedule and interest schedule reflects this. Its year end is
December 31.
Requirements:
a) Indicate whether the bonds were issued at a premium or a discount and explain
how you came to your decision.
b) Compute the stated interest rate and the effective interest rate
c) Prepare the journal entries for the following years:
I. 2011, 2012 & 2018.

Transcribed Image Text:Rentokil Limited
Bond Amortization Schedule
Amount
Jan 1 2011
Date
Cash
Interest
unamortized Carrying Value
5.651
94.349
December 31 2011
11,000
11,322
5.329
94,671
December 31 2012
11,000
11,361
4.968
95,032
December 31 2013
11,000
11,404
4.564
95.436
December 31 2014
11,000
11,452
4,112
95.888
December 31 2015
11,000
11,507
3,605
96.395
December 31 2016
11,000
11,567
3.038
96,962
December 31 2017
11,000
11,635
2,403
97.597
December 31 2018
11,000
11,712
1,691
98,309
December 31 2019
11,000
11,797
894
99.106
December 31 2020
11,000
11,894
100,000
110,000
115,651
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