BONDS Federal Semiconductors issued 1 1 % bonds dated January 1, with a face amo
ID: 2658427 • Letter: B
Question
BONDS Federal Semiconductors issued 1 1 % bonds dated January 1, with a face amount of $800 on January 1 2006. The bonds were sold for $739,814 and mature 20 years later. The ma interest was 12%. Interest is paid semiannually on June 30 and Dec. 31. ,000 market rate of Prepare the journal entry to record their issuance by Federal on Jan., 1,2006. Prepare an amortization schedule using the effective method for the first two interest periods peniods repare the journal entry to record interest on June 30, 2006 using the effective interest method. repare the journal entry to record interest on Dec. 31, 2006 using the effective interest method.Explanation / Answer
Answer -
Amortization Schedule A B C D E F Period Ending Booking Value of bonds at the beginning of period Interest Expense (B*11%/12*6) Payment Amount 800000*11%/2 Premium Amortization Booking Value of bonds at the end of period 30-Jun-06 739,814 40,690 44,000 3,310 736,504 31-Dec-06 736,504 40,508 44,000 3,492 733,011 30-Jun-07 733,011 40,316 44,000 3,684 729,327 31-Dec-07 729,327 40,113 44,000 3,887 725,440 Journal Entries 30-Jun-16 Interest Expense Dr 40,690 Premium on bonds payable Dr 3,310 To Cash Account Cr 44,000 (to record interest payment and amortization) 30-Jun-16 Interest Expense Dr 40,508 Premium on bonds payable Dr 3,492 To Cash Account Cr 44,000 (to record interest payment and amortization)Related Questions
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