Radcliff Corporation issued a 10% $80,000 bond on January 1,

Radcliff Corporation issued a 10% $80,000 bond on January 1, 2013 due on January 1, 2017. Interest is payable each July 1 and January 1. The company received $75,031.96 for the bond and the required effective interest rate was 12%.


Instructions

(a) Calculate the discount on the bond.

(b) Prepare a bond amortization schedule for the 4 years. Be sure to clearly show the semiannual interest payments.

(c) Prepare the necessary journal entries to show:

i. The issuance of the bond on January 1, 2013.

ii. Interest payments on July 1, 2013.

iii. Interest payments on December 31, 2013.


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