Before maturity, Foster Incorporated sold $500,000 of 12% bonds on January 1, 2013, for $470,143.47, a price

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Before maturity, Foster Incorporated sold $500,000 of 12% bonds on January 1, 2013, for $470,143.47, a price that yields a 14% interest rate. The bonds pay interest semiannually on June 30 and December 31 and are due December 31, 2016. Foster uses the effective interest method.

Required:

1. Prepare an interest expense and discount amortization schedule.

2. Assume the company reacquired the bonds on July 1, 2015, at 104. Prepare journal entries to record the bond retirement.

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Related Book For  book-img-for-question

Intermediate Accounting Reporting and Analysis

ISBN: 978-1111822361

1st edition

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

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