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Prepare an amortization schedule by the straight-line method

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On January 1, 2018, Bradley Recreational Products issued $100,000, 11%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $96,895 to yield an annual return of 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

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

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

Question 3. Prepare the journal entries to record interest expense on June 30, 2020, by each of the two approaches.

Question 4. Assuming the market rate is still 12%, what price would a second investor pay the first investor on June 30, 2020, form $12,000 of the bonds?

Reference no: EM132466701

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