On January 1, 2020, Aumont Company sold 12% bonds having a maturity value of $500,000 for $537,907.37,

Question:

On January 1, 2020, Aumont Company sold 12% bonds having a maturity value of $500,000 for $537,907.37, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Aumont Company allocates interest and unamortized discount or premium on the effective-interest basis.

Instructions

(Round answers to the nearest cent.)

a. Prepare the journal entry at the date of the bond issuance.

b. Prepare a schedule of interest expense and bond amortization for 2020–2022.

c. Prepare the journal entry to record the interest payment and the amortization for 2020.

d. Prepare the journal entry to record the interest payment and the amortization for 2022.

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...

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