Standard Autoparts Inc. issued $170,000 of 8%, 10-year bonds at a price of 84 on January 31, 2020. The market interest rate at the date of issuance was 10%, and the standard bonds pay interest semi-annually. 1. Prepare an effective-interest amortization table for the bonds through the first three interest payments. 2. Record Standard's issuance of the bonds on January 31, 2020, and payment of the first semi-annual interest amount and amortization of the bonds on July 31, 2020. Explanations are not required.
Standard Autoparts Inc. issued $170,000 of 8%, 10-year bonds at a price of 84 on January 31, 2020. The market interest rate at the date of issuance was 10%, and the standard bonds pay interest semi-annually. 1. Prepare an effective-interest amortization table for the bonds through the first three interest payments. 2. Record Standard's issuance of the bonds on January 31, 2020, and payment of the first semi-annual interest amount and amortization of the bonds on July 31, 2020. Explanations are not required.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Standard Autoparts Inc. issued $170,000 of 8%, 10-year bonds at a price of 84 on January 31, 2020. The market interest rate at the date of issuance was 10%, and the standard bonds pay interest semi-annually.
1. Prepare an effective-interest amortization table for the bonds through the first three interest payments.
2. Record Standard's issuance of the bonds on January 31, 2020, and payment of the first semi-annual interest amount and amortization of the bonds on July 31, 2020. Explanations are not required.
Transcribed Image Text:A
Interest Payment
Semi-annual (4% of Maturity
Interest Date
Value)
Jan. 31, 2020
July 31, 2020
Jan. 31, 2021
July 31, 2021
B
Interest Expense (5%
of Preceding Bond
Carrying Amount)
C
D
Bond Discount Bond Discount
Amortization (B Account Balance
- A) (Preceding D-C)
E
Bond Carrying
Amount
($170,000 - D)
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