Answered step by step
Verified Expert Solution
Question
1 Approved Answer
K point(s) possible This question: 1 point(s) possible Submit test Standard Autoparts Inc. issued $100,000 of 7%, 10-year bonds at a price of 87
K point(s) possible This question: 1 point(s) possible Submit test Standard Autoparts Inc. issued $100,000 of 7%, 10-year bonds at a price of 87 on January 31, 2020 The market interest rate at the date of issuance was 9%, and the standard bonds pay interest semi-annually. 1. Prepare an effective-interest amortization table for the bonds through the first three interest payments. 2. Record Standard's issuance of the bonds on January 31, 2020, and payment of the first semi-annual interest amount and amortization of the bonds on July 31, 2020. Explanations are not required 1. Prepare an effective-interest amortization table for the bonds through the first three interest payments: (Round your answers to the nearest whole dollar.) Semi-annual Interest Date Jan. 31, 2020 July 31, 2020 Jan. 31, 2021 Standard Autoparts Amortization Table A Interest Payment Interest Expense (4.5% of Bond Discount (3.5% of Maturity Preceding Bond Carrying Amortization (B Value) Amount) A) Account Balance Bond Discount (Preceding D-C) Bond Carrying Amount ($100,000-D) July 31, 2021 2. Record Standard's issuance of the bonds on January 31, 2020, and payment of the first semi-annual interest amount and amortization of the bonds on July 31, 2020. (Record debits first, then credits. Explanations are not required.) Start by recording the issuance of bonds on January 31, 2020. Date Accounts Jan. 31, 2020 Cash Discount on Bonds Payable Bonds Payable Debit Credit 1000000 Now, record the payment of the first semi-annual interest amount and amortization of the bonds on July 31, 2020. Date Accounts July 31, 2020 Interest Expense Discount on Bonds Payable Debit Credit
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