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On January 1, 2022, Smith & Co. issued an $800,000 Bond at a Stated Rate of 7% paying interest semi-annually for 10 years. Interest payment
On January 1, 2022, Smith & Co. issued an $800,000 Bond at a Stated Rate of 7% paying interest semi-annually for 10 years. Interest payment dates are June 30th and December 31st. At the date of the issue, the Market Rate of interest had fallen to 6%. a) What is the Selling Price of the Bond Issue? b) Prepare a journal entry at January 1, 2022 to record the Bond Issue. c) Assuming the Effective Interest Method - prepare journal entries for June 30th and December 31st of 2022 to record Interest Expense and Amortization of the premium or discount. d) Assuming the Effective Interest Method, what was total Interest Expense reported for the year 2022? e) Assuming the Effective Interest Method, what is the Carrying Value of the Bond as of December 31st 2022? f) Assuming the Straight-Line Method - prepare journal entries for June 30th and December 31st of 2022 to record Interest Expense and Amortization of the premium or discount. g) Assuming the Straight Line Method, what was total Interest Expense reported for the year 2022? h) Assuming the Straight Line Method, what is the Carrying Value of the Bond as of December 31st 2022
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