Prepare journal entry to record the bonds life

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Reference no: EM1353031

Shopko issues $185,000 of 12%, three-year bonds dated January 1, 2009, that pay interest semiannually on June 30 and December 31. They are issued at $189,620. Their market rate is 11% at the issue date.

1: Prepare the January 1, 2009, journal entry to record the bonds' life.

2: Determine the total bond interest expense to be recognized over the bonds' life.

3: Prepare an effective interest amortization table for the bonds' first two years.

4: Prepare the journal entries to record the first two interest payments.

5: Prepare the journal entry to record the bonds' retirement on January 1,2011 at 97

6: Assume that the market rate on January 1, 2009, is 13% instead of 11%. Without presenting numbers, describe how this change affects the amounts reported on Shopko's financial statements.

Reference no: EM1353031

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