On July 1, 2001, Global Satellites Corporation issued $1,200,000 face value, 9%, 10-year bonds at $1,125,227. This

Question:

On July 1, 2001, Global Satellites Corporation issued $1,200,000 face value, 9%, 10-year bonds at $1,125,227. This price resulted in an effective-interest rate of 10% on the bonds. Global uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest July 1 and January 1.

Instructions

(Round all computations to the nearest dollar.)

(a) Prepare the journal entry to record the issuance of the bonds on July 1, 2001.

(b) Prepare an amortization table through December 31, 2002 (three interest periods) for this bond issue.

(c) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2001.

(d) Prepare the journal entry to record the payment of interest and the amortization of the discount on July 1, 2002.

(e) Prepare the journal entry to record the accrual of interest and the amortization of the discount on December 31, 2002.

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Related Book For  book-img-for-question

Financial Accounting Tools For Business Decision Making

ISBN: 9780471347743

2nd Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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