Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 58

On September 1, 2011, Rodriguez Plumbing Company issued $5 million in 10-year, 12 percent bonds payable.nterest is payable semiannually on March 1 and September 1.ond discounts and premiums are amortized at each interest payment date and at year-end.he company's fiscal year ends at December 31.
Instructions
a.ake the necessary adjusting entries at December 31, 2015, and the journal entry to record the payment of bond interest on March 1, 2016, under each of the following assumptions:
1.he bonds were issued at 98.Round to the nearest dollar.)
2.he bonds were issued at 104.Round to the nearest dollar.)
b.ompute the net bond liability at December 31, 2016, under assumptions 1 and 2 above.Round to the nearest dollar.)
c.nder which of the above assumptions, 1 or 2, would the investor's effective rate of interest be higher Explain.