Effective-interest method for discount-premium amortization

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Reference no: EM13824310

Titania Co. sells $411,500 of 12% bonds on June 1, 2014. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2018. The bonds yield 10%. On October 1, 2015, Titania buys back $127,000 worth of bonds for $133,030 (includes accrued interest).

Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end.

Prepare all of the relevant journal entries from the time of sale until the date indicated. Give entries through December 1, 2016. (Assume that no reversing entries were made.)

Reference no: EM13824310

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