On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest

Question:

On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 6% and the bonds issued at $644,632.


Required:

1. Using an amortization schedule, show that the bonds have a carrying value of $633,887 on December 31, 2026.

2. If the market interest rate increases to 8% on December 31, 2026, it will cost $568,311 to retire the bonds. Record the retirement of the bonds on December 31, 2026.

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Related Book For  book-img-for-question

Financial Accounting

ISBN: 978-1259914898

5th edition

Authors: David Spiceland, Wayne M. Thomas, Don Herrmann

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