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Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver
Edition 3ISBN: 978-0132962339Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver
Edition 3ISBN: 978-0132962339 Exercise 39
Calculating and recording bonds when stated rate and market rate are different
Nicholas Rausch, Co., issued $300,000 of 11%, 10-year bonds payable at a price of 106.2410 on March 31, 2012. The market interest rate at the date of issuance was 10%, and the bonds pay interest semiannually.
Requirements
1. How much cash did the company receive upon issuance of the bonds payable
2. Prepare an effective-interest amortization table for the bond premium, through the first two interest payments. Use Exhibit 11A-2 as a guide, and round amounts to the nearest dollar.
3. Journalize the issuance of the bonds on May 31, 2012, and, on November 30, 2012, payment of the first semiannual interest amount and amortization of the bond premium. Explanations are not required.
Nicholas Rausch, Co., issued $300,000 of 11%, 10-year bonds payable at a price of 106.2410 on March 31, 2012. The market interest rate at the date of issuance was 10%, and the bonds pay interest semiannually.
Requirements
1. How much cash did the company receive upon issuance of the bonds payable
2. Prepare an effective-interest amortization table for the bond premium, through the first two interest payments. Use Exhibit 11A-2 as a guide, and round amounts to the nearest dollar.
3. Journalize the issuance of the bonds on May 31, 2012, and, on November 30, 2012, payment of the first semiannual interest amount and amortization of the bond premium. Explanations are not required.
Explanation
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Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver
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