On March 1, 2020, Quinto Mining Inc. issued a $600,000, 8%, three-year bond. Interest is payable semiannually

Question:

On March 1, 2020, Quinto Mining Inc. issued a $600,000, 8%, three-year bond. Interest is payable semiannually beginning September 1, 2020.

Required

Part 1

a. Calculate the bond issue price assuming a market interest rate of 7% on the date of issue.

b. Using the effective interest method, prepare an amortization schedule.

c. Record the entries for the issuance of the bond on March 1, the adjusting entry to accrue bond interest and related amortization on April 30, 2020, Quinto’s year-end, and the payment of interest on September 1, 2020.

Part 2

a. Calculate the bond issue price assuming a market interest rate of 8.5% on the date of issue.

b. Using the effective interest method, prepare an amortization schedule.

c. Record the entries for the issuance of the bond on March 1; the adjusting entry to accrue bond interest and related amortization on April 30, 2020, Quinto’s year-end; and the payment of interest on September 1, 2020.

d. Record the entries for the retirement of 30% of the bonds at 102, on September 1, 2020, after the interest payment.

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Part 1 a Total issue price 615986 Calculator keystrokes n 3 years 2 periods per year 6 FV 600000 PMT 24000 i 7 2 periodsyear 35 Compute PV where PV 61...View the full answer

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Fundamental Accounting Principles Volume II

ISBN: 978-1260305838

16th Canadian edition

Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann

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Question Posted: Dec 18, 2019 05:14 AM

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On March 1, 2020, Quinto Mining Inc. issued a $600,000, 8%, three-year bond. Interest is payable semiannually

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Step by Step Answer:

Part 1 a Total issue price 615986 Calculator keystrokes n 3 years 2 periods per year 6 FV 600000 PMT 24000 i 7 2 periodsyear 35 Compute PV where PV 61...View the full answer

Fundamental Accounting Principles Volume II

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