Question: Effective Interest Amortization On December 3 1 , Caper, Inc., issued $ 3 0 0 , 0 0 0 of 8 % , 9 -

Effective Interest Amortization
On December 31, Caper, Inc., issued $300,000 of 8%,9-year bonds for $288,000, yielding an effective interest rate of 10%. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the discount.
Required
a. Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar.
b. Prepare the journal entry for the bond issuance on December 31.
c. Prepare the journal entry to record the bond interest payment and discount amortization at June 30 of the following year.
d. Prepare the journal entry to record the bond interest payment and discount amortization at December 31 of the following year.
a.
Year
Interest
Period
Interest
Paid Interest
Expense
Periodic
Amortization
Balance
of Unamortized
Discount Book Value
of Bonds
End of Period
at issue Answer
0
Answer
0
Answer
0
Answer
0
Answer
0
11 Answer
0
Answer
0
Answer
0
Answer
0
Answer
0
2 Answer
0
Answer
0
Answer
0
Answer
0
Answer
0
General Journal
Date Description Debit Credit
b.
Dec.31 Cash Answer
0
Answer
0
Answer
Answer
0
Answer
0
Answer
Answer
0
Answer
0
To record issuance of bonds.
c.
Jun.30 Answer
Answer
0
Answer
0
Answer
Answer
0
Answer
0
Cash Answer
0
Answer
0
To record semiannual interest paymentand discount amortization.
d.
Dec.31 Answer
Answer
0
Answer
0
Answer
Answer
0
Answer
0
Cash Answer
0
Answer
0
To record semiannual interest paymentand discount amortization.

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