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Specialty Autoparts Inc. issued $190,000 of 5%, 10-year bonds at a price of 90 on January 31, 2020. The market interest rate at the date
Specialty Autoparts Inc. issued $190,000 of 5%, 10-year bonds at a price of 90 on January 31, 2020. The market interest rate at the date of issuance was 8%, and the standard bonds pay interest semi-annually. 1. Prepare an effective-interest amortization table for the bonds through the first three interest payments. 2. Record Specialty's issuance of the bonds on January 31, 2020, and payment of the first semi-annual interest amount and amortization of the bonds on July 31, 2020. Explanations are not required. 1. Prepare an effective-interest amortization table for the bonds through the first three interest payments. (Round your answers to the nearest whole dollar.) Specialty Autoparts Amortization Table A B E Interest Payment Interest Expense Bond Discount Bond Discount Bond Semi-annual (2.5% of (4% of Preceding Bond Amortization Account Balance Carrying Amount Interest Date Maturity Value) Carrying Amount) (B - A) (Preceding D-C) ($190,000 -D) 159600 Jan 31, 2020 30400 July 31, 2020 4750 Jan. 31, 2021 4750 July 31, 2021 4750 2. Record Specialty's issuance of the bonds on January 31, 2020, and payment of the first semi-annual interest amount and amortization of the bonds on July 31, 2020. (Record debits first, then credits. Explanations are not required.) Start by recording the issuance of bonds on January 31, 2020 Journal Entry 2020 Accounts Debit Credit Jan. 31 Accounts Payable Bonds Payable Cash int and amortization of the bonds on July 31, 2020. Now, record the Discount on Bonds Payable Interest Expense Interest Payable 2020 Premium on Bonds Payable Debit Credit July 31
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