On March 1, 2023, Quinto Mining Inc. issued a $600,000, 8%, three-year bond. Interest is payable semiannually
Question:
On March 1, 2023, Quinto Mining Inc. issued a $600,000, 8%, three-year bond. Interest is payable semiannually beginning September 1, 2023.
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, 2023, Quinto’s year-end, and the payment of interest on September 1, 2023.
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, 2023, Quinto’s year-end; and the payment of interest on September 1, 2023.
d. Record the entries for the retirement of 30% of the bonds at 102, on September 1, 2023, after the interest payment.
Step by Step Answer:
Fundamental Accounting Principles Volume 2
ISBN: 9781260881332
17th Canadian Edition
Authors: Kermit D. Larson, Heidi Dieckmann, John Harris