Effective Interest: Amortization of bond; retiring bonds Ike issues $170,000 of
ID: 2404923 • Letter: E
Question
Effective Interest: Amortization of bond; retiring bonds
Ike issues $170,000 of 9%, three-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. They are issued at $174,453. Their market rate is 8% at the issue date.
2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
3. Prepare an effective interest amortization table for the bonds' first two years.
4. Prepare the journal entries to record the first two interest payments.
5. Prepare the journal entry to record the bonds' retirement on January 1, 2019, at 98.
Total bond interest expense over life of bonds: Amount repaid: payments of Par value at maturity 0 Less amount borrowed Total bond interest expense 0Explanation / Answer
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Solution 5:
Total bond interest expense over the life of bond Particulars Amount Amount Repaid: 6 semiannual interest payments of $7,650 each $45,900.00 Par Value at Maturity $170,000.00 Total Repayments $215,900.00 Less: Amount borrowed $174,453.00 Total bond interest expense $41,447.00Related Questions
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