Question
Complete the following effective-interest amortization table through October 1, 2022. Round all amounts to the nearest whole dollar. BOND DATA Maturity value $2,000,000 Contract interest
Complete the following effective-interest amortization table through October 1, 2022. Round all amounts to the nearest whole dollar.
BOND DATA | |
|
|
Maturity value | $2,000,000 |
Contract interest rate | 8% |
Interest paid | 4% semi-annually, $80,000 ($2,000,000 x 0.04) |
Market interest rate at time of issue | 9% annually, 4.5% semi-annually |
Issue proceeds | $1,869,921 |
A | B | C | D | E | F |
Semi-annual Interest Period | Interest Payment (4.5% of Maturity Value) | Interest Expense (4.5% of Preceding F) | Discount Amortization (C-B) | Unamortized Discount Account Balance (Preceding E-Current D) | Bond Carrying Amount ($2,000,000 E) |
Oct 1, 2020 |
|
|
|
|
|
Apr 1, 2021 |
|
|
|
|
|
Oct 1,2021 |
|
|
|
|
|
Apr 1, 2022 |
|
|
|
|
|
Oct 1, 2022 |
|
|
|
|
|
2. Using the amortization table you completed, record the following transactions:
- Issuance of the bonds on October 1, 2020.
- Accrual of interest and amortization of discount on December 31, 2020.
- Payment of interest and amortization of discount on April 1, 2021.
- Conversion of one-third of the bonds payable into common shares on October 2, 2022.
- Retirement of two-thirds of the bonds payable on October 2, 2022. Purchase price of the bonds was 102.00
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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