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On October 1, 2020, Ross Wind Energy Inc. issued a $1,700,000, 11.5%, seven-year bond. Interest is to be paid annually each October 1. Assume a
On October 1, 2020, Ross Wind Energy Inc. issued a $1,700,000, 11.5%, seven-year bond. Interest is to be paid annually each October 1. Assume a November 30 year-end. (Use TABLE 14A.1 and TABLE 14A.2.). (Use appropriate factor(s) from the tables provided.) Required: a. Calculate the issue price of the bond assuming a market interest rate of 10% on the date of the bond issue. (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) Issue price of the bond b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.) Period Ending Cash Interest Paid Period Interest Expense Premium Amort. Unamortized Premium Carrying Value Oct. 1/20 Oct. 1/21 Oct. 1/22 Oct. 1/23 Oct. 1/24 Oct. 1/25 Oct. 1/26 Oct. 1/27 Totals $ 0 $ 0 $ 0 Part 1 Record the following entries: (Round the final answers to the nearest whole dollar.) a. Issuance of the bonds on October 1, 2020 2. Adjusting entry to accrue bond interest and premium amortization on November 30, 2020 c. Payment of interest on October 1, 2021 Part 2 Show how the bond will appear on the balance sheet under non-current liabilities at November 30, 2024. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)
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