On September 1, 2017, Yone Ltd. issued a $2,000,000 bond with a 9 percent coupon rate and
Question:
On September 1, 2017, Yone Ltd. issued a $2,000,000 bond with a 9 percent coupon rate and a maturity date of August 31, 2023. Interest is paid annually on August 31. The effective interest rate for a bond of this type on
September 1, 2017 was 7 percent. Yone's year-end is August 31.
Required:
a. What will be the proceeds from the bond issue?
b. Prepare the journal entry to record the issue of the bond on September 1, 2017.
c. Prepare an amortization schedule using the effective interest rate method for any premium or discount that arose on issue of the bond.
d. Prepare the journal entry required to record the interest expense on August 31, 2018, 2019, and 2022.
e. Prepare the journal entry required to record the retirement of the bond on maturity.
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Step by Step Answer:
a Date 01Sep17 Maturity date 31Aug23 Annual Face Value FV 2000000 Number of periods 6 Effective rate ...View the full answer
