On September 1, 1979, Howell Stores, Inc., issues 20-year, first mortgage bonds with a face value of

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On September 1, 1979, Howell Stores, Inc., issues 20-year, first mortgage bonds with a face value of \(\$ 1,000,000\). The proceeds of the issue are \(\$ 1,060,000\). The bonds bear interest at the rate of 8 percent per annum, payable semiannually at March 1 and September 1. Howell Stores, Inc., closes its books annually at December 31. (Round amounts to the nearest dollar.)

a Present dated journal entries related to the bonds from September 1, 1979, through September 1, 1980, inclusive. Assume that Howell Stores, Inc., uses the straight-line method to amortize the bond premium.

b Repeat instructions for part

a, but assume that the company uses an effective-interest method. The effective-interest rate to be used is 7.4 percent, compounded semiannually. (Round amounts to the nearest dollar.)

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Financial Accounting An Introduction To Concepts Methods And Uses

ISBN: 9780030452963

2nd Edition

Authors: Sidney Davidson, Roman L. Weil, Clyde P. Stickney

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