On january 1 2011 bradley recreational products issued

Reference no: EM13603028

On January 1, 2011, Bradley Recreational Products issued $100,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $96,768 to yield an annual return of 10%.

Required:

1 Prepare an amortization schedule that determines interest at the effective interest rate.

2 Prepare an amortization schedule by the straight-line method.

3 Prepare the journal entries to record interest expense on June 30, 2013, by each of the two approaches.

4 Explain why the pattern of interest differs between the two methods. 5 Assuming the market rate is still 10%, what price would a second investor pay the first investor on June 30, 2013, for $10,000 of the bonds?

Reference no: EM13603028

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