West Virginia Power Company has 8%, 10-year bonds payable that mature on June 30, 2034. The bonds

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West Virginia Power Company has 8%, 10-year bonds payable that mature on June 30, 2034. The bonds are issued on June 30, 2024, and West Virginia Power pays interest each June 30 and December 31.


Requirements

1. Will the bonds be issued at face value, at a premium, or at a discount if the market interest rate on the date of issuance is 7%? If the market interest rate is 10%?
2. West Virginia Power issued $100,000 of the bonds at 87.548. Round all calculations to the nearest dollar. 

a. Record issuance of the bonds on June 30, 2024.

b. Record the payment of interest and amortization of the discount on December 31, 2024. Use the straight-line amortization method.

c. Compute the bonds’ carrying amount at December 31, 2024.

d. Record the payment of interest and amortization of discount on June 30, 2025.

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Related Book For  book-img-for-question

Horngrens Financial And Managerial Accounting The Financial Chapters

ISBN: 9781292412320

7th Global Edition

Authors: Tracie Miller-Nobles, Brenda Mattison, Ella Mae Matsumura

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