Question
On January 1, 2020, The Justice League issued $100,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were
On January 1, 2020, The Justice League issued $100,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $96,768 to yield an annual return of 10%.
Required:
- Show how Justice League calculated the $96,768 bond price (round each to the whole dollar).
- Prepare an amortization schedule for the dates indicated using the effective interest rate method.
| Date | Cash Payment | Interest Expense | Amortization | Carry Value |
| 1/1/2020 |
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| 6/30/2020 |
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| 12/31/2020 |
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| 6/30/2021 |
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- Prepare the journal entries to record the issuance of the bond on January 1 and interest expense on June 30, 2020.
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3) What amount would the bonds be reported on the balance sheet at the end 2020?
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Comparative International Accounting
Authors: Christopher Nobes, R. H. Parker
7th Edition
0273655833, 9780273655831
