Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
9-5) On January 1, 2019, Hawthorne Corporation issued for $155,989, 5-year bonds with a face amount of $150,000 and a stated (or coupon) rate of
9-5)
On January 1, 2019, Hawthorne Corporation issued for $155,989, 5-year bonds with a face amount of $150,000 and a stated (or coupon) rate of 9%. The bonds pay interest annually and have an effective interest rate of 8%. Assume Hawthorne uses the effective interest rate method.
| Required: | |||||
| 1. | Prepare the entry to record the sale of the bonds. | ||||
| 2. | Calculate the amount of the interest payments for the bonds. | ||||
| 3. | Prepare the amortization table through 2020. | ||||
| 4. | Prepare the journal entry for December 31, 2019, to record the payment of interest and the related interest expense. | ||||
| 5. | Calculate the annual interest expense for 2019 and 2020.
| ||||
| Hawthorne Corporation | |||||
| Amortization Table | |||||
| Period | Cash Payment (Credit) | Interest Expense (Debit) | Premium on Bonds Payable (Debit) | Premium on Bonds Payable Balance | Carrying Value |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started