Question
On January 1, 2018, Bradley Recreational Products issued $100,000, 12%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were
On January 1, 2018, Bradley Recreational Products issued $100,000, 12%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $94,029 to yield an annual return of 14%. (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.) Required: 1. Prepare an amortization schedule that determines interest at the effective interest rate. 2. Prepare an amortization schedule by the straight-line method. 3. Prepare the journal entries to record interest expense on June 30, 2020, by each of the two approaches. 5. Assuming the market rate is still 14%, what price would a second investor pay the first investor on June 30, 2020, for $14,000 of the bonds?
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