Question
Jessica Corporation issued $4,000,000, 5-year, 8 % bonds on January 1, 2012. The bonds were issued @ 87.53785 to yield an effective market rate of
Jessica Corporation issued $4,000,000, 5-year, 8 % bonds on January 1, 2012. The bonds were issued @ 87.53785 to yield an effective market rate of 10 %. Interest is payable semi-annually on July 1 and January 1. Financial statements are prepared on December 31st.
How much cash was received from the sale of the bonds?
How much interest is paid every six months on the bond?
How much cash was received if the bonds were sold at 103 instead?
If the bonds had been sold at 103, how much interest would be paid every six months?
Complete this table to calculate the bond interest expense and amortization amounts.
Interest Period | Bond Interest Cash Payment | Bond Interest Expense | ____?___ Amortization | Unamortized ______?______ | Carrying Value |
Issue Date | ------------------------- | ----------------------- | ------------------------- |
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7/1/12 |
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Prepare the entry to record the sale of these bonds on 1/1/12.
Account Titles | Debit | Credit |
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