Solution-Record the journal entry at the time of the sale

Record the journal entry at the time of the sale

Assignment Help Financial Accounting

Reference no: EM132532423

Freshii sold $900,000 par value, 6%, 10-year bonds on January 1, 2018 to yield the buyers an 8% return. The company uses the effective interest method for amortization. Interest is paid semiannually on June 30 and December 31.

PV:

$1 received each period for 20 periods at 4%: 13.5903

$1 received at the end of 20 periods, at 4%: 0.4564

$1 received each period for 20 periods at 3%: 14.8775

$1 received at the end of 20 periods, at 3%: 0.5537

Required:

Question 1: Record the journal entry at the time of the sale

Question 2: Prepare an amortization schedule for the first two payment periods using the format shown below

Please fill in information on letter A to E for the 2 dates listed below.

Interest Payment date 6/30/2018 12/31/2018

(A) Cash Interest Paid ( to the bond holder)

B) Period Interest expense (for the company)

(D) Unamortized Discount

(E) Carrying Value

Question 3: How much total bond interest expense will be recognized over the life of these bonds?

Question 4: Prepare the journal entry for the period 6/30/18.

Reference no: EM132532423

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Record the journal entry at the time of the sale

Reference no: EM132532423

Reference no: EM132532423

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