On December 31, Caper, Inc., issued $500,000 of 8%, 9-year bonds for $440,000, yielding an effective interest rate of 10%. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the discount. Required a. Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. D. Prepare the journal entry for the bond issuance on December 31. Prepare the journal entry to record the bond interest payment and discount amortization at June 30 of the following year. d. Prepare the journal entry to record the bond interest payment and discount amortization at December 31 of the following year. 3. Interest Interest Year Period Paid at issue 1 Date b. Dec.31 Cash C. Jun.30 d 1 2 $ 0 $ 0 0 Interest Expense Balance Periodic of Unamortized Amortization Discount To record issuance of bonds. 0 $ 0 0 General Journal Description 0 $ 0 0 + ◆ + + Cash To record semiannual interest paymentand discount amortization. Book Value of Bonds End of Period 0 $ 0 0 Debit 0 0 0 0 0 0 0 0 0 Credit 0 0 0 0 0 0

On December 31, Caper, Inc., issued $500,000 of 8%, 9-year bonds for $440,000, yielding an effective interest rate of 10%. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the discount. Required a. Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. D. Prepare the journal entry for the bond issuance on December 31. Prepare the journal entry to record the bond interest payment and discount amortization at June 30 of the following year. d. Prepare the journal entry to record the bond interest payment and discount amortization at December 31 of the following year. 3. Interest Interest Year Period Paid at issue 1 Date b. Dec.31 Cash C. Jun.30 d 1 2 $ 0 $ 0 0 Interest Expense Balance Periodic of Unamortized Amortization Discount To record issuance of bonds. 0 $ 0 0 General Journal Description 0 $ 0 0 + ◆ + + Cash To record semiannual interest paymentand discount amortization. Book Value of Bonds End of Period 0 $ 0 0 Debit 0 0 0 0 0 0 0 0 0 Credit 0 0 0 0 0 0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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