On November 1, 2017, Nordin Inc. (Nordin) issued a $5,000,000 bond with a 6 percent coupon rate
Question:
On November 1, 2017, Nordin Inc. (Nordin) issued a $5,000,000 bond with a 6 percent coupon rate and a maturity date of October 31, 2022.
Interest is paid semi-annually on April 30 and October 31. The effective interest rate for a bond of this type on November 1, 2017 was 8 percent. Nordin's year-end is October 31.
Required:
a. What will the proceeds from the bond issue be?
b. Prepare the journal entry to record the issue of the bond on November 1, 2017.
c. Prepare an amortization schedule using the effective interest rate method for any premium or discount that arose on issue of the bond.
d. Prepare the journal entry required to record the interest expense on April 30 and October 31, 2018 and 2020.
e. Prepare the journal entry required to record the retirement of the bond on maturity.
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Step by Step Answer:
a The proceeds of the bond issue are 4 594 455 Issue date 01Nov17 Maturity date 31Oct22 SemiAnnual Face Value FV 5000000 Number of periods 10 5 period...View the full answer
