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Question
A company issued 10%, five-year bonds with a par value of $2,000,000, on January 1, 2013. Interest is to be paid semiannually each June 30 and December 31. The bonds were sold at $2,162,290 to yield the buyers an 8% annual return. The company uses the effective interest method of amortization.
(1) Prepare an amortization table for the first two semiannual payment periods using the format shown below.
| Semiannual Interest Period | Cash Interest Paid | Bond Interest Expense | Premium Amortization | Unamortized Premium | Carrying Value |
(2) Prepare the general journal entry to record the first semiannual interest payment.
Answer
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Related questions
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Q:
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A. Total cost times markup percentage.
B. Total cost per unit times markup percentage per unit.
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D. Markup percentage per unit divided by total cost per unit.
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Q:
Capital budgeting decisions are generally based on:
A. Tentative predictions of future outcomes.
B. Perfect predictions of future outcomes.
C. Results from past outcomes only.
D. Results from current outcomes only.
E. Speculation of interest rates and economic performance only.
Q:
If net present values are used to evaluate two investments that have equal costs and equal total cash flows, the one with more cash flows in the early years has the higher net present value.