The Batson Corporation issued $800,000 of 12% face value bonds for $851,705.70. The bonds were dated and
Question:
The Batson Corporation issued $800,000 of 12% face value bonds for $851,705.70. The bonds were dated and issued on April 1, 2007, are due March 31, 2011, and pay interest semiannually on September 30 and March 31. The company sold the bonds to yield 10%.
Required
1. Prepare a bond interest expense and premium amortization schedule using the straight-line method.
2. Prepare a bond interest expense and premium amortization schedule using the effective interest method.
3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2007, using:
a. The straight-line method of amortization
b. The effective interest method of amortization
4. Assume the company retires the bonds on June 30, 2008, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using:
a. The straight-line method of amortization
b. The effective interest method of amortization
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones