On July 31, 2013, Mooney Inc. issued $500,000 of five-year, 4% bonds at 102. Interest is payable
Question:
On July 31, 2013, Mooney Inc. issued $500,000 of five-year, 4% bonds at 102. Interest is payable semiannually on July 31 and January 31. Mooney's fiscal year end is January 31.
Instructions
(a) Is the market rate of interest higher or lower than 4%? Explain.
(b) Record the issue of the bonds on July 31, 2013.
(c) Record the payment of interest on January 31, 2014, assuming the semi-annual amortization amount for this interest period is $923.
(d) Identify what amounts, if any, would be reported as a current liability and non-current liability with respect to the bonds and bond interest accounts on January 31, 2014.
Step by Step Answer:
Accounting Principles Part 3
ISBN: 978-1118306802
6th Canadian edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow