On January 1, 2014, Fleetwood Inc. issued bonds with a face amount of $25 million and a

Question:

On January 1, 2014, Fleetwood Inc. issued bonds with a face amount of $25 million and a stated interest rate of 8%. The bonds mature in 10 years and pay interest semiannually on June 30 and December 31 of each year. The market rate of interest on January 1, 2014, for bonds of this type was 6%. Fleetwood closes its books on December 31.

Required:
1. At what price were the bonds issued?
2. Using the effective interest method, prepare an amortization schedule showing interest expense, amortization, and bond carrying value for each of the first four semiannual interest payment periods.
3. Prepare journal entries to record the first four semiannual interest payments.
4. How would the bonds be shown on Fleetwood’s December 31, 2014, and on its December 31, 2015, Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...