Question: On March 1, 2014, Quinto Mining Inc. issued a $600,000, 8%, three-year bond. Interest is payable semi-annually beginning September 1, 2014. Required Part 1 a.

On March 1, 2014, Quinto Mining Inc. issued a $600,000, 8%, three-year bond. Interest is payable semi-annually beginning September 1, 2014.

Required
Part 1
a. Calculate the bond issue price assuming a market interest rate of 7% on the date of issue.
b. Using the effective interest method, prepare an amortization schedule.
c. Record the entry for the issuance of the bond on March 1, the adjusting entry to accrue bond interest and related amortization on April 30, 2014, Quinto’s year-end, and the payment of interest on September 1, 2014.

Part 2
a. Calculate the bond issue price assuming a market interest rate of 8.5% on the date of issue.
b. Using the effective interest method, prepare an amortization schedule.
c. Record the entries for the issuance of the bond on March 1, the adjusting entry to accrue bond interest and related amortization on April 30, 2014, Quinto’s year-end, and the payment of interest on September 1, 2014.

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