9th Edition

ISBN: 9781260681956

Author: SPICELAND

Publisher: MCG

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Textbook Question

Chapter 14, Problem 14.10E

Issuance of bonds; effective interest; amortization schedule

National Orthopedics Co. issued 9% bonds, dated January 1, with a face amount of $500,000 on January 1, 2018. The bonds mature on December 31, 2021 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31.

Required:

1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record their issuance by National on January 1, 2018.
3. Prepare an amortization schedule that determines interest at the effective rate each period.
4. Prepare the journal entry to record interest on June 30, 2018.
5. Prepare the appropriate journal entries at maturity on December 31, 2021.

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Chapter 14, Problem 14.9E

Chapter 14, Problem 14.11E

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Chapter 14 Solutions

INTERMEDIATE ACCOUNTING, W/CONNECT

Ch. 14 - How is periodic interest determined for...Ch. 14 - As a general rule, how should long-term...Ch. 14 - How are bonds and notes the same? How do they...Ch. 14 - What information is contained in a bond indenture?...Ch. 14 - On January 1, 2018, Brandon Electronics issued 85...Ch. 14 - How is the price determined for a bond (or bond...Ch. 14 - A zero-coupon bond pays no interest. Explain.Ch. 14 - Prob. 14.8Q Ch. 14 - Compare the two commonly used methods of...Ch. 14 - Prob. 14.10Q

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