Question

On January 1, 2015, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year.

Required:
Assuming the market interest rate on the issue date is 8%, the bonds will issue at $559,740.
1. Complete the first three rows of an amortization table. Use Illustration 9–13, except the dates for the first three rows will be 1/1/15, 12/31/15, and 12/31/16 since interest is payable annually rather than semiannually. Interest expense for the period ended December 31, 2015, is calculated as the carrying value of $559,740 times the market rate of 8%.
2. Record the bond issue on January 1, 2015, and the first two interest payments on December 31, 2015, and December 31, 2016.



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  • CreatedJuly 15, 2014
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