
(1)
Bonds
Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.
Effective interest rate of amortization bond
Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.
To Determine: The price of the bonds for Company N as on 1st January 2016.
(2)
To Prepare: The
(3)
To Prepare: The amortization schedule using effective interest rate method.
(4)
To Prepare: The journal entry to record interest on June 30, 2016.
(5)
To Prepare: The Journal entry to record the maturity as on 31st December 2019.

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Chapter 14 Solutions
Intermediate Accounting w/ Annual Report; Connect Access Card
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