Question
Otter Products Inc. issued bonds on January 1,2019. Interest is to be paid semi-annually other information is as follows: term in years: 2 face value
Otter Products Inc. issued bonds on January 1,2019. Interest is to be paid semi-annually other information is as follows: term in years: 2 face value of bonds $200,000 issue price: $206,000 specified interest rate each payment period 6% Required:
1) calculate:
a. the amount of interest paid in cash every payment period
b. the amount of amortization to be recorded at each interest payment date (use the straight-line method)
2) complete this amortization table by calculating interest expense, and beginning and ending bond carrying amounts at the end of each period over two years
a b c d e (A+D)
beg actual periodic ending
bond periodic cash discount bond
period carrying interest interest (perm) carrying
year ending amount expense paid amort. amount 2019 jun 30
dec 31
2020
jun 30
dec 31
2021 jun 30
dec 31
3) calculate the actual interest rate under the straight-line method of amortization for each six-month period. Round all percentage calculations to two decimal placed. use the following format
A B
six month bond six month
period carrying intrest ending amount expense %
year (B/A)
2019 Jun 30
Dec 31
2020 Jun 30
Dec 31
2021 Jun 30
Dec 31
4) prepare the journal entry for December 31,2019
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