Question
On July 1, 2016, James Jones Company sold $3,000,000 in long-term bonds. The bonds will mature in 10 years and have a stated interest rate
On July 1, 2016, James Jones Company sold $3,000,000 in long-term bonds. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10%. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effectiveinterest method. Instructions
a. Determine the selling price of the bonds. (Round to the nearest $100)
b. Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31. Make sure all columns and rows are properly labeled. (Round to the nearest dollar, and the last year will be heavily rounded.)
c. Assuming that interest and discount amortization are recorded each May 31, prepare the adjusting entry to be made on December 31, 2018.
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