Question
On December 31, 2020, Whitfield Corp. issued $ 500,000 8% bonds, due on December 31, 2025. Interest is to be paid semi-annually on June 30
On December 31, 2020, Whitfield Corp. issued $ 500,000 8% bonds, due on December 31, 2025. Interest is to be paid semi-annually on June 30 and December 31. The bonds were sold at a market value of $461,390 to yield 10% effective annual interest. Whitfield has a calendar year end.
Required:
- Complete the following amortization schedule for the dates indicated. Round all answers to the nearest dollar. Use the effective-interest method. (4marks)
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| Cash interest paid | Interest expense | Premium Amortization | Carrying amount of bonds |
| Dec. 31,2020 |
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| $461,390 |
| June 30, 2021 |
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| Dec. 31, 2021 |
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- Prepare the journal entry for Whitfield at December 31, 2021, to record the payment of 6 months interest (from June 30 to December 31) and related expense. (3 marks)
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Auditing And Assurance Services An Integrated Approach
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
18th Edition
0137879199, 9780137879199
