Question
Problem 14.6.b. National Orthopedics Co. issued 8% bonds, dated January 1, with a face amount of $600,000 on January 1, 2018. The bonds mature on
Problem 14.6.b.
National Orthopedics Co. issued 8% bonds, dated January 1, with a face amount of $600,000 on January 1, 2018. The bonds mature on December 31, 2021 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
- Determine the price of the bonds at January 1, 2018.
- Prepare the journal entry to record their issuance by National on January 1, 2018.
- Prepare an amortization schedule that determines interest at the effective rate each period.
- Prepare the journal entry to record interest on June 30, 2018.
- Prepare the appropriate journal entries at maturity on December 31, 2021.
Prepare an amortization schedule that determines interest at the effective rate each period . (Round final answers to the nearest whole dollar.)
| Semiannual Interest Period-End | Cash Interest | Bond Interest Expense | Discount Amortization | Carrying Value |
| 01/01/2018 |
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| 06/30/2018 |
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|
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| 12/31/2018 |
|
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| 06/30/2019 |
|
|
|
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| 12/31/2019 |
|
|
|
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| 06/30/2020 |
|
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| 12/31/2020 |
|
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|
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| 06/30/2021 |
|
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|
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| 12/31/2021 |
|
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|
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| Total |
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|
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Front Office Operations And Night Audit Workbook
Authors: Patrick J. Moreo, Gail Sammons, Jim Dougan, James Dougan
1st Edition
0133987698, 978-0133987690
