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Effective Interest Amortization On January 1 , Raines, Inc., issued $ 4 0 0 , 0 0 0 of 6 % , 1 5 -
Effective Interest Amortization
On January Raines, Inc., issued $ of year bonds for $ yielding an effective interest rate of Semiannual interest is payable on June and December 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 January
c Prepare the journal entry to record the bond interest payment and discount amortization at June
d Prepare the journal entry to record the bond interest payment and discount amortization at December
a
Year
Interest
Period
Interest
Paid Interest
Expense
Periodic
Amortization
Balance
of Unamortized
Discount Book Value
of Bonds
End of Period
at issue Answer
Answer
Answer
Answer
Answer
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General Journal
Date Description Debit Credit
b
Dec Cash
Answer
Answer
Answer
Answer
Answer
Answer
Answer
Answer
To record issuance of bonds.
c
Jun Answer
Answer
Answer
Answer
Answer
Answer
Cash Answer
Answer
To record semiannual interest payment and discount amortization.
d
Dec Answer
Answer
Answer
Answer
Answer
Answer
Cash Answer
Answer
To record semiannual interest payment and discount amortization.
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Essentials Of Forensic Accounting
Authors: Michael A Crain, William S Hopwood
2nd Edition
1948306441, 978-1948306447
