On September 1, 1979, Howell Stores, Inc., issues 20-year, first mortgage bonds with a face value of
Question:
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.)
Step by Step Answer:
Financial Accounting An Introduction To Concepts Methods And Uses
ISBN: 9780030452963
2nd Edition
Authors: Sidney Davidson, Roman L. Weil, Clyde P. Stickney