On July 31, 2021, Mooney Inc. issued $500,000 of 5-year, 4% bonds at 102. Interest is payable

Question:

On July 31, 2021, Mooney Inc. issued $500,000 of 5-year, 4% bonds at 102. Interest is payable semi-annually on July 31 and January 31. Mooney’s fiscal year end is January 31.

Instructions

a. Is the market rate of interest higher or lower than 4%? Explain.

b. Record the issue of the bonds on July 31, 2021.

c. Record the payment of interest on January 31, 2022, assuming the semi-annual amortization amount for this interest period is $923.

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Accounting Principles Volume 2

ISBN: 978-1119502555

8th Canadian Edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

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Question Posted: Feb 20, 2020 12:18 PM

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On July 31, 2021, Mooney Inc. issued $500,000 of 5-year, 4% bonds at 102. Interest is payable

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a The market rate of interest is lower than the contract rate of 4 interest which ...View the full answer

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