Western Inc. issues $800,000 of 5-year, 6% bonds on January 1, 2017. The bonds pay interest annually.
Question:
Western Inc. issues $800,000 of 5-year, 6% bonds on January 1, 2017. The bonds pay interest annually.
Instructions
(a) Calculate the issue price of the bonds using a market rate of 5% and record the bond issue.
(b) Prepare an effective interest amortization table for the bonds.
(c) Prepare the journal entries to record the first three interest payments.
(d) Assuming Western has an October 31 year end, prepare the adjusting entry for interest on October 31, 2017.
Step by Step Answer:
a Market interest rate 5 800000 078353 800000 6 432948 834639 Using a financial calculator PV Yi...View the full answer
Accounting Principles
ISBN: 978-1119048473
7th Canadian Edition Volume 2
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
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