I. On March $1,20$x$4,$ Ludwig Corp. issued $$700,000$ of its $8\%$ bonds. The bonds mature in $5$ years.

The bonds were priced to yield $10\%.$ Interest is payable semiannually on February $28$ and August $31.$

Ludwig records interest at the effective rate.

Required:

$1.$ Determine the price of the bonds at March $1,20$x$4$

$2.$ Prepare the journal entry to record the bond issuance on March $1,20$x$4$

$3.$ Prepare an amortization table through the maturity $($for $5$ years$).$

$4.$ Prepare the entry to record interest on August $31,20$x$4$ for the first payment.

$5.$ Prepare the adjusting entry on December $31,20$x$4*$In adjusting entries, cash account is never used.

$6.$ Prepare the entry to record interest on February $28,20$x$5$ for the second payment.

$7.$ Assume all bonds are retired at $103\mathrm{.}75$ on February $28,20$x$5$ right after the second payment is made.

Prepare the necessary journal entry for the retirement on February $28,20$x$5.$

Answer rating: 100% (QA)

1 Determine the price of the bonds at March 1 20x4 To calculate the price of the bonds we use the pr... View the full answer