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Effective Interest Amortization On December 31, Caper, Inc., issued $300,000 of 8%, 9-year bonds for $288,000, yielding an effective interest rate of 10%. Semiannual interest
Effective Interest Amortization On December 31, Caper, Inc., issued $300,000 of 8%, 9-year bonds for $288,000, yielding an effective interest rate of 10%. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the discount. Required a. Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. b. Prepare the journal entry for the bond issuance on December 31, c. Prepare the journal entry to record the bond interest payment and discount amortization at June 30 of the following year. d. Prepare the journal entry to record the bond interest payment and discount amortization at December 31 of the following year, Interest Year Period at issue Interest Pald Interest Periodic Expense Amortization Balance of Unamortized Discount Book Value of Bonds End of Period $ 1 General Journal Description Debit Credit Date b Dec.31 Cash 4 To record issuance of bonds, C Jun 30 Cash To record semiannual interest paymentand discount amortization. d. Dec 31 General Journal Description Date Debit Credit b. Dec.31 Cash A . To record issuance of bonds. C. Jun.30 . Cash To record semiannual interest paymentand discount amortization. d. Dec.31 A Cash To record semiannual interest paymentand discount amortization
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