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Effective Interest Amortization On December 31, Caper, Inc., issued $500,000 of 8%, 9-year bonds for $440,000, yielding an effective interest rate of 10%. Semiannual interest
Effective Interest Amortization On December 31, Caper, Inc., issued $500,000 of 8%, 9-year bonds for $440,000, 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. a. Year at issue 1 Interest Period Date b. Dec.31 Cash 1 2 $ Interest Paid 0 $ 0 0 Interest Expense Periodic Amortization 0 $ 0 0 Description 0 $ 0 0 General Journal Balance of Unamortized Discount Book Value of Bonds End of Period 0 $ 0 0 Debit 0 0 0 0 0 Credit 0 0 3
Effective interest Amortization firm uses the effective intereut memod to amortize the detount. Fequired 3. Prepore an anontuation whedule showing the nechstary informetios foe the fint two imeres penods. Hound amounts to the nearest dolar. b. Prebure the journal erty foe the bend isstance on December 31 . C. Prepare the poumal entry 10 rocard the bond interest payment and oscount amtrization at yune so af the fellowng yea. d. Prepare the journal entry to record the bond inteieat payment and dscount amortuation it December 31 dif the followag yeaf Step by Step Solution
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