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On January 1, 2019, Hawthorne Corporation issued for $155,989, 5-year bonds with a face amount of $150,000 and a stated (or coupon) rate of 9%.
On January 1, 2019, Hawthorne Corporation issued for $155,989, 5-year bonds with a face amount of $150,000 and a stated (or coupon) rate of 9%. The bonds pay interest annually and have an effective interest rate of 8%. Assume Hawthorne uses the effective interest rate method.
Required: | |
1. | Prepare the entry to record the sale of the bonds. |
2. | Calculate the amount of the interest payments for the bonds. |
3. | Prepare the amortization table through 2020. |
4. | Prepare the journal entry for December 31, 2019, to record the payment of interest and the related interest expense. |
5. | Calculate the annual interest expense for 2019 and 2020. |
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