Question
National Orthopedics Co. issued 8% bonds, dated January 1, with a face amount of $600,000 on January 1, 2013. The bonds mature on December 31,
National Orthopedics Co. issued 8% bonds, dated January 1, with a face amount of $600,000 on January 1, 2013. The bonds mature on December 31, 2016 (4 years). For bonds of similar risk and maturity the market yield was 12%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) |
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1. | Determine the price of the bonds at January 1, 2013.
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2. | Prepare the journal entry to record their issuance by National on January 1, 2013. (If no entry is required for a transaction, select "No journal entry required" in the first account field.) |
3. | Prepare an amortization schedule that determines interest at the effective rate each period.
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4. | Prepare the journal entry to record interest on June 30, 2013. (If no entry is required for a transaction, select "No journal entry required" in the first account field.) | ||
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