Calculate the net book value of the bonds

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Question - Chase Corporation has $10,000,000 of 4 percent, 10-year bonds dated January 1, with interest payment dates of June 30 and December 31. The company's fiscal year ends December 31.

a. Assume the bonds are issued for $8,512,000 on January 1 to yield an effective interest rate of 6 percent. Prepare journal entries for January 1, June 30, and December 31, assuming that Blake Corporation uses the effective interest method to amortize bond premiums or discounts.

b. Calculate the net book value of the bonds after the interest payments have been made on June 30 and December 31.

Reference no: EM132965638

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