Reference no: EM132804238
Question - Assume Whiteside Corporation issues that Br. 5000,000 of ten-years, 10% term bonds are authorized. Assume also that the effective (yield) rate of interest for such types of bonds on the date of issuance is:
Case: 1. 12%
Case: 2. 8%
Required -
Compute the periodic/ annual interest to be paid/ collected on the bonds payable/investment.
Compute the amount of proceeds from bonds/ acquisition price of the bonds under case 1
Compute the amount of discount on bonds under case 1.
Present the journal entry to record the issuance /acquisition of the bonds under case 1.
Compute the amount of effective interest expense/revenue over the term of the bonds/investment under case 1.
Prepare discount amortization table (which is termed as discount accumulation table by the investor) under case 1 using interest method.
Present journal entries to record the first two annual interest payments/receipts under case 1 using interest method.
Prepare the periodic discount amortization table or periodic discount accumulation table under case 1 using the straight-line method
Present journal entries to record the first two annual interest payments/receipts under case 1 using straight-line method.
Compute the amount of proceeds from bonds/ acquisition price of the bonds under case 2.
Compute the amount of premium on bonds under case 2.
Present the journal entry to record the issuance /acquisition of the bonds under case 2.
Compute the amount of effective interest expense/revenue over the term of the bonds/investment under case 2.
Prepare premium amortization table under case 2 using interest method.
Present journal entries to record the first two annual interest payments/receipts under case 2 using interest method.
Prepare the periodic premium amortization table under case 2 using the straight-line method
Present journal entries to record the first two annual interest payments/receipts under case 2 using straight-line method.
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