Problem

$3

\ Issuer and investor journal entries (Effective interest method)\ Kyle Corporation issued

$500,000

in bonds to Du Incorporated on March 31, 2023. were created on January 1,2023, but were not issued until later due to problems selling in the markel. The bonds mature on December 31, 2026. The bonds pay interest at an annual rain of 10 percent. The interest payment dates are each June 30 and December 312,500 of accrued interest interest is 4 percent. Du Incorporated paid

$615,981

for the bond

$2,401

of implicit amortization and

$603,481

for the fair value of the bonds - i.e.,

$609,882

less

$6,401

of inective interest method from January 1 to March 31). The amortization of the bonds wsing the the first six months). The from March 31 to June 30 is

$6,401

(i.e., 50 percent of

t

fair value of the bonds on January 1, 2023, is

$609,882

.\ REQUIRED:\ a. Using the effective interest method, complete the remainder of the amortization schedule from issuance through maturity.\ \\\\table[[,\\\\table[[Cash],[Payment]],\\\\table[[Effective],[Interest]],\\\\table[[Premium],[Amortization]],\\\\table[[Carrying],[Value]]],[\\\\table[[

(1)/(1)/23

Problem \#3 Issuer and investor journal entries (Effective interest method) Kyle Corporation issued $500,000 in bonds to Du Incorporated on March 31, 2023. were created on January 1,2023 , but were not issued until later due to problems selling in the market. The bonds mature on December 31,2026. The bonds pay interest at an annual raic of 10 percent. The interest payment dates are each June 30 and December 31. The market rate of interest is 4 percent. Du Incorporated paid $615,981 for the bonds ( $12,500 of accrued interest and $603,481 for the fair value of the bonds-i.e., $609,882 less $6,401 of implicit amortization from January 1 to March 31). The amortization of the bonds using the effective interest method from March 31 to June 30 is $6,401 (i.e., 50 percent of the amount for the first six months). The fair value of the bonds on January 1, 2023, is $609,882. REQUIRED: a. Using the effective interest method, complete the remainder of the amortization schedule from issuance through maturity. b. Using the effective interest method, prepare the journal entries required on March 31 , 2023, June 30,2023, and December 31,2023, for both parties. Du Inc. intends to hold the bonds to maturity. c. Instead of using the effective interest method, compute the amount of monthly amortization for each party using straight-line amortization