On July 1, 2012, Bobby's Building Corp. issued $1,000,000 of 10% bonds dated July 1, 2012 for $937,229. The bonds were sold to yield 11% and pay interest semiannually on June 31 and December 31. Bobby's Building Corp. uses the effective interest method of amortization.
Required (Round all amounts to the nearest dollar):
1. Prepare the journal entry to record the issuance of the bonds on July 1, 2012.
2. Complete the amortization table below for the first two interest periods.
3. Prepare the journal entry to record the interest payment on December 31, 2012.
4. Suppose Bobby's Building Corp. has a fiscal year end of February 28. Prepare any adjusting entry needed on February 28, 2012.

Question

On July 1, 2012, Bobby's Building Corp. issued $1,000,000 of 10% bonds dated July 1, 2012 for $937,229. The bonds were sold to yield 11% and pay interest semiannually on June 31 and December 31. Bobby's Building Corp. uses the effective interest method of amortization.
Required (Round all amounts to the nearest dollar):
1. Prepare the journal entry to record the issuance of the bonds on July 1, 2012.
2. Complete the amortization table below for the first two interest periods.
  3. Prepare the journal entry to record the interest payment on December 31, 2012.
4. Suppose Bobby's Building Corp. has a fiscal year end of February 28. Prepare any adjusting entry needed on February 28, 2012.

Quizplus · Accepted Answer

The Answer of On July 1, 2012, Bobby's Building Corp. issued $1,000,000 of 10% bonds dated July 1, 2012 for $937,229. The bonds were sold to yield 11% and pay interest semiannually on June 31 and December 31. Bobby's Building Corp. uses the effective interest method of amortization.
Required (Round all amounts to the nearest dollar):
1. Prepare the journal entry to record the issuance of the bonds on July 1, 2012.
2. Complete the amortization table below for the first two interest periods.
  3. Prepare the journal entry to record the interest payment on December 31, 2012.
4. Suppose Bobby's Building Corp. has a fiscal year end of February 28. Prepare any adjusting entry needed on February 28, 2012.