Determine the issue price of the bonds

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Reference no: EM13751913

On March 1, 2014, Oaken furniture Co. issued $700,000 of 10 percent bonds to yield 8 percent. Interest is payable semiannually on February 28 and August 31. The bonds mature in ten years. Oaken Furniture Co. is a calendar-year corporation.

1. Determine the issue price of the bonds. Show your computations.

2. Prepare an amortization table through the first two interest periods using the effective-interest method.

3. Prepare the journal entries to record bond-related transactions as of the following dates:

A. March 1, 2014

B. August 31, 2014

C. December 31, 2014

D. February 28, 2015

Reference no: EM13751913

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