Effective-Interest Amortization of Bond Premium On January 1, 2002, Pollard Corporation issued $250,000 of 4-year bonds with
Question:
Effective-Interest Amortization of Bond Premium On January 1, 2002, Pollard Corporation issued $250,000 of 4-year bonds with a stated interest rate of 6 percent. Interest is paid annually on December 31. The current market rate for similarly rated bonds at the time of issue was 5 percent, and Pollard received $258,864 when the bonds were issued. Assuming the effective-interest method is used in recording interest expense:
a. Prepare a bond interest and amortization table for the life of the bonds.
b. Give the journal entry recorded by Pollard at the time the bonds were issued.
c. Give the journal entries recorded by Pollard over the life of the bonds.
d. Give the balance sheet presentation of the bond liability at December 31, 2002.
Step by Step Answer:
Financial Accounting A Decision Making Approach
ISBN: 9780471328230
2nd Edition
Authors: Thomas E. King, Valdean C. Lembke, John H. Smith