On March 1, 2020, Quinto Mining Inc. issued a $690,000, 8%, three-year bond. Interest is payable semiannually beginning September 1, 2020.

Required:
Part 1

a. Calculate the bond issue price assuming a market interest rate of 7% on the date of issue.

b. Using the effective interest method, prepare an amortization schedule.

c. Record the entries for the issuance of the bond on March 1, the adjusting entry to accrue bond interest and related amortization on April 30, 2020, Quinto’s year-end, and the payment of interest on September 1, 2020.

Part 2
a. Calculate the bond issue price assuming a market interest rate of 9.0% on the date of issue. 

b. Using the effective interest method, prepare an amortization schedule. 

c. Record the entries for the issuance of the bond on March 1; the adjusting entry to accrue bond interest and related amortization on April 30, 2020, Quinto’s year-end; and the payment of interest on September 1, 2020.

d. Record the entries for the retirement of 30% of the bonds at 102, on September 1, 2020, after the interest payment.

Answer rating: 100% (QA)

Part 1 Bond issue pricePresent value of bond interest paymentPresent value repayment of bond at matu... View the full answer