Question

Nordic Company issued bonds with the following provisions: Maturity value: $ 60,000,000 Interest: 7.9 percent per annum payable semi- annually each June 30 and December 31 Terms: Bonds dated January 1, 2014, due five years from that date The Company’s fiscal year ends on December 31. The bonds were sold on January 1, 2014, at a yield of 8 percent.
Required:
1. Compute the issue (sale) price of the bonds (show computations).
2. Prepare the journal entry to record the issuance of the bonds.
3. Prepare the journal entries at the following dates: June 30, 2014; December 31, 2014; and June 30, 2015. Use the effective- interest method to amortize bond discount or premium.
4. How much interest expense would be reported on the statement of earnings for 2014? Show how the liability related to the bonds should be reported on the statement of financial position at December 31, 2014.


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  • CreatedAugust 04, 2015
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