On January 1, 2014, Spalding Company sold 12% bonds having a maturity value of $1,000,000 for $1,075,814.74,
Question:
On January 1, 2014, Spalding Company sold 12% bonds having a maturity value of $1,000,000 for $1,075,814.74, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2014, and mature January 1, 2019, with interest payable December 31 of each year. Spalding Company allocates interest and unamortized discount or premium on the effective-interest basis.
Instructions
(a) Prepare the journal entry at the date of the bond issuance.
(b) Prepare a schedule of interest expense and bond amortization for 2014–2016.
(c) Prepare the journal entry to record the interest payment and the amortization for 2014.
(d) Prepare the journal entry to record the interest payment and the amortization for 2016.
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...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield