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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:

  1. Determine the price of the bonds at January 1, 2018.
  2. Prepare the journal entry to record their issuance by National on January 1, 2018.
  3. Prepare an amortization schedule that determines interest at the effective rate each period.
  4. Prepare the journal entry to record interest on June 30, 2018.
  5. 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

06/30/2018

12/31/2018

06/30/2019

12/31/2019

06/30/2020

12/31/2020

06/30/2021

12/31/2021

Total

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