Question
On May 1, 2018, Leno Company issued $800,000 of 8 percent, 5-year bonds at a yield of 6 percent compounded semiannually. Interest is payable on
On May 1, 2018, Leno Company issued $800,000 of 8 percent, 5-year bonds at a yield of 6 percent compounded semiannually. Interest is payable on May 1 and November 1 of each year. The corporation is a calendar-year corporation. Bond premiums and discounts are amortized on interest-paying dates and at year-end. On November 1, 2019, Leno reacquired the bonds for retirement when they were selling at 101 on the open market . (1)Determine the issue price of the bonds. Show your computations. (Round to the nearest dollar.) (2)Prepare an amortization table through the first three interest periods using the effective-interest method. (Round to the nearest dollar.) (3) Prepare the journal entries to record bond-related transactions on the following dates (Round to the nearest dollar.): a. May 1, 2018 b. December 31, 2018 c. May 1, 2019 d. November 1, 2019
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