Chapter 14 - Bonds Payable

Lily Company issued 2.000,000 of 10% term bonds on January 1, 2020, due on January 1 January 2025, with interest payable each July 1 and January Investors require an effective-interest rate of 12%.

Instruction:

1. What type of bond this transaction?
2. Calculate the bond proceeds. (How much is the carrying value of the bond)
3. Entries on date of issue
4. Journal Entry to record first payment and amortization on July 1, 2020
5. Prepare the schedule table of this bond amortization and explain what is carrying amount mean when maturity date?
6. Entries on 31 December 2023