Question

On February 1, 2014, Fireswirl Corp. issued a $900,000, 5%, two-year bond. Interest is payable quarterly each May 1, August 1, November 1, and February 1.

Required
Part 1
a. Calculate the bond issue price assuming a market interest rate of 6% on the date of issue.
b. Using the effective interest method, prepare an amortization schedule.
c. Record the entry for the issuance of the bond on February 1, the adjusting entry to accrue bond interest and related amortization on March 31, 2014, Fireswirl Corp.’s year-end, and the payment of interest on May 1, 2014.

Part 2
a. Calculate the bond issue price assuming a market interest rate of 4.5% on the date of issue.
b. Using the effective interest method, prepare an amortization schedule.
c. Record the entries for the issuance of the bond on February 1, the adjusting entry to accrue bond interest and related amortization on March 31, 2014, Fireswirl Corp.’s year-end, and the payment of interest on May 1, 2014.



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  • CreatedJanuary 08, 2015
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