On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year.Required:Assuming the market interest rate on the issue date is 8%, the bonds will issue at $559,740.1. Complete the first three rows of an amortization schedule. (Hint: Use Illustration 9–6, except the dates for the first three rows will be 1/1/21, 12/31/21, and 12/31/22 since interest is payable annually rather than semiannually. Interest expense for the period ended December 31, 2021, is calculated as the carrying value of $559,740 times the market rate of 8%.)2. Record the bond issue on January 1, 2021, and the first two interest payments on December 31, 2021, and December 31, 2022.
On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year.
Required:
Assuming the market interest rate on the issue date is 8%, the bonds will issue at $559,740.
1. Complete the first three rows of an amortization schedule. (Hint: Use Illustration 9–6, except the dates for the first three rows will be 1/1/21, 12/31/21, and 12/31/22 since interest is payable annually rather than semiannually. Interest expense for the period ended December 31, 2021, is calculated as the carrying value of $559,740 times the market rate of 8%.)
2. Record the bond issue on January 1, 2021, and the first two interest payments on December 31, 2021, and December 31, 2022.
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