Question

Win-Eldrich Corp. issued $940,000 of bonds that pay 9.7% annual interest with two semi-annual payments. The date of issuance was January 1, 2014, and the interest is paid on June 30 and December 31. The bonds mature after 10 years and were issued at the price of $922,428. The market interest rate was 10% and the company uses the effective interest method of amortization.

Required
1. Show how the bond price was determined and prepare a General Journal entry to record the issuance of the bonds.
2. Determine the total bond interest expense that will be recognized over the life of these bonds.
3. Prepare the first two lines of an amortization table based on the effective interest method.
4. Present the journal entries that Win-Eldrich Corp. would make to record the first two interest payments.



$1.99
Sales0
Views72
Comments0
  • CreatedJanuary 08, 2015
  • Files Included
Post your question
5000