Grove Corporation issued $800,000 of 8% bonds on October 1, 2010, due on October 1, 2015. The

Question:

Grove Corporation issued $800,000 of 8% bonds on October 1, 2010, due on October 1, 2015. The interest is to be paid twice a year on April 1. The bonds were sold to yield 10% effective annual interest. Grove Corporation closes its books annually on December 31.

Instructions

(a) Complete the following amortization schedule for the dates indicated. Use the effective-interest method. Credit Cash Debit interest Expense Credit Bond Discount Carrying Amount of Bonds

1-Oct-10

1-Apr-11

1-Oct-11

(b) Prepare the adjusting entry for the December 31, 2011. Use the effective-interest method.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...