On October 1, 2019, Rupert Limited sold a 4% six-year, $20 million bond at 94.92, providing a
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Question:
On October 1, 2019, Rupert Limited sold a 4% six-year, $20 million bond at 94.92, providing a yield of 5% annually. Interest is paid annually on September 30. On January 1, 2022, Dunbar retired all the bonds at 101. The company’s year-end is December 31. Required:
1. Prepare the journal entry to record the issuance of the bond on October 1, 2019.
2. Prepare the journal entry to record interest expense on December 31, 2019, the payment of interest on September 30, 2020 and the interest expense on December 31, 2020, assuming the company uses the effective interest method in amortizing any discounts or premiums.
3. Determine the interest expense for 2021.
4. Prepare the journal entry to record the retirement of the bond on January 1, 2022.
Expert Answer:
Step 1 Answer with all necessary workings are as follows Step 2 Answer Amortization Schedule Cash In... View the full answer
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