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Calculate the issue price of the bond

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Question - On January 1, 2014, Kramer International Inc. issued $200,000, 9%, 5-year bonds. The bonds were sold to yield an effective interest rate of 10%. Interest is paid semi-annually on June 30 and December 31. The company uses the effective-interest method of amortization.

Instructions -

a. Calculate the issue price (PV) of the bond.

b. Prepare bond discount amortization schedule which shows the amortization of discount for the first two interest payment dates.

c. Prepare the journal entries that Kramer International would make on January 1, June 30, and December 31, 2014, related to the bond issue.

Reference no: EM132429348

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