Calculate the bond price and prepare the entry

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Reference no: EM133030611

Problem - Green Oak issued a $900,000, 7%, 10-year bonds on December 31, 2021, for cash. The current market rate is 10%. The corporation uses the effective interest amortization method. Interest is payable semi-annually on June 30 and December 31.

Required -

1. Calculate the bond price and prepare the entry at the issuance date.

2. Prepare an amortization schedule for the first five payment periods using the format shown below:

Period Ending

Cash Interest paid

Period Interest Expense

Discount Amortized

Unamortized Discount

Carrying Value

12/31/2021

 

 

 

 

 

6/30/2022

 

 

 

 

 

12/31/2022

 

 

 

 

 

6/30/2023

 

 

 

 

 

12/31/2023

 

 

 

 

 

6/30/2024

 

 

 

 

 

12/31/2024

 

 

 

 

 

6/30/2025

 

 

 

 

 

12/31/2025

 

 

 

 

 

3. Prepare the entries to pay an interest on June 30, 2023 and December 31, 2023.

Reference no: EM133030611

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