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 |
|
|
|
|
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 |
|
|
|
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started