Question
On February 1, 2021, Nikawi Ltd. issued a 4%, 8-year bond with a face value of $480,000. Interest (coupon) payments are made on January 31
On February 1, 2021, Nikawi Ltd. issued a 4%, 8-year bond with a face value of $480,000. Interest (coupon) payments are made on January 31 and July 31. Nikawi Ltd. receives $462,792 in cash. The company uses the effective interest method.
Requirement 1: Prepare a bond amortization table for the first two semi-annual interest periods.
Requirement 2: Record the journal entries for the issuance of the bond on February 1, 2021 and the semi-annual interest payments for July 31, 2021 and January 31, 2022.
Blank #1: What is the interest payment on July 31, 2021? Blank #2: What is the interest expense on July 31, 2021? Blank #3: What is the carrying amount of the bond on July 31, 2021?
Blank #4: What is the interest payment on January 31, 2022? Blank #5: What is the interest expense on January 31, 2022? Blank #6: What is the carrying amount of the bond on January 31, 2022?
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