Bell Company sold $200,000 of 10-year bonds on January 1, 2011, to Brown Corporation. The bond indenture
Question:
Bell Company sold $200,000 of 10-year bonds on January 1, 2011, to Brown Corporation. The bond indenture included the following information:
Face value $200,000
Date of bonds January 1, 2011
Maturity date January 1, 2021
Stated rate of interest 14%*
Effective (market) rate of interest 12%*
*Compounded semiannually
Required:
1. Prepare the journal entry to record the issuance of the bonds.
2. What is the interest expense on the Bell Company books for the years ending December 31, 2011, and December 31, 2012, using straight-line amortization?
3. Show how the bonds would be presented on Bell’s balance sheet at December 31, 2012.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
1 Issuance price 200000 x 03118 Table I Appendix B x 6 20 periods 62360 14000 x 114699 Table II Appe...View the full answer
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
