Question
Nordic Company issued bonds with the following provisions:Maturity value: $60,000,000.Interest: 7.9 percent per annum payable semi-annually each June 30 and December 31.Terms: Bonds dated January
Nordic Company issued bonds with the following provisions:Maturity value: $60,000,000.Interest: 7.9 percent per annum payable semi-annually each June 30 and December 31.Terms: Bonds dated January 1, 2017, due five years from that date.The company's fiscal year ends on December 31. The bonds were sold on January 1, 2017, at a yield of 8 percent.
1.Compute the issue (sale) price of the bonds.
2.Prepare the journal entry to record the issuance of the bonds.
3.Prepare the journal entries at the following dates: June 30, 2017; December 31, 2017; and June 30, 2018. Use the effective-interest method to amortize bond discount or premium.
4.How much interest expense would be reported on the statement of earnings for 2017?
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