Hadley Ltd. is authorized to issue $5,000,000 of 4%, 10-year bonds payable. On December 31, 2014, when the market interest rate is 5%, the company issues $4,000,000 of the bonds. Hadley Ltd. amortizes bond discount by the effective-interest method. The semiannual interest dates are June 30 and December 31.

1. Use the PV function in Excel to calculate the issue price of the bonds.
2. Using Exhibit 9-4 as a model, prepare a bond amortization table for the term of the bonds.
3. Record issuance of the bonds payable on December 31, 2014; the first semiannual interest payment on June 30, 2015; and the second payment on December 31, 2015.

  • CreatedJuly 25, 2014
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