On March 31st, 2020, Adtech Inc. issued $200,000, 9%, 10-yearbonds. The bonds pay interest semi-annually, on September
Question:
On March 31st, 2020, Adtech Inc. issued $200,000, 9%, 10-yearbonds. The bonds pay interest semi-annually, on September 30and March 31. The first interest payment is on September 30, 2020.The bonds are issued at a price of 114 1/4 (i.e., $228,500). The issuance price implies an effective interest rate of 7%. Bond issue costs are $10,000, which are amortized using the straight-line method. Adtech's fiscal year-end is on December31.
1. Prepare all necessary journal entries in relation to these bonds between March 30, 2020 and April 1st, 2021. Make sure you indent your credit and clearly mark the date for each journal entry.
2. What is the amount of the liability that Adtech has to the bondholders on September 30, 2021, after the interest payment on that date?
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello