On October 1, 2023, Ross Wind Energy Inc. issued a $1,590,000, 11.5%, seven-year bond. Interest is to be paid annuallyeach October 1. Assume a November 30 year-end. (Use TABLE 14A.1 and TABLE 14A.2.). (Use appropriate factor(s) fromthe tables provided.)Required:a. Calculate the issue price of the bond assuming a market interest rate of 10% on the date of the bond issue. (Do notround intermediate calculations. Round the final answer to the nearest whole dollar.)b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Roundthe final answers to the nearest whole dollar. Enter all the amounts as positive values.)Part 1Record the following entries: (Round the final answers to the nearest whole dollar.)Issuance of the bonds on October 1, 2023Adjusting entry to accrue bond interest and premium amortization on November 30, 2023Payment of interest on October 1, 2024Part 2Show how the bond will appear on the balance sheet under non-current liabilities at November 30, 2024. (Do not roundintermediate calculations. Round the final answers to the nearest whole dollar.)

It is a common approach used to amortize the discount or premium on a bond over its life. It is a…

On October 1, 2023, Ross Wind Energy Inc. issued a $1,590,000, 11.5%, seven-year bond. Interest is to be paid annually each October 1. Assume a November 30 year-end. (Use TABLE 14A.1 and TABLE 14A.2.). (Use appropriate factor(s) from the tables provided.)

On October 1, 2023, Ross Wind Energy Inc. issued a $1,590,000, 11.5%, seven-year bond. Interest is to be paid annually each October 1. Assume a November 30 year-end. (Use TABLE 14A.1 and TABLE 14A.2.). (Use appropriate factor(s) from the tables provided.)

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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Question

On October 1, 2023, Ross Wind Energy Inc. issued a $1,590,000, 11.5%, seven-year bond. Interest is to be paid annually
each October 1. Assume a November 30 year-end. (Use TABLE 14A.1 and TABLE 14A.2.). (Use appropriate factor(s) from
the tables provided.)
Required:
a. Calculate the issue price of the bond assuming a market interest rate of 10% on the date of the bond issue. (Do not
round intermediate calculations. Round the final answer to the nearest whole dollar.)
b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Round
the final answers to the nearest whole dollar. Enter all the amounts as positive values.)
Part 1
Record the following entries: (Round the final answers to the nearest whole dollar.)
Issuance of the bonds on October 1, 2023
Adjusting entry to accrue bond interest and premium amortization on November 30, 2023
Payment of interest on October 1, 2024
Part 2
Show how the bond will appear on the balance sheet under non-current liabilities at November 30, 2024. (Do not round
intermediate calculations. Round the final answers to the nearest whole dollar.)

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Step 1: Effective Interest Method:

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Step 2: (a) Calculate the issue price of the bond:

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Step 3: (b) Prepare an amortization schedule:

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Step 4: Part 1:- Record the entries:

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Step 5: Part 2:- Prepare balance sheet under non-current liabilities at November 30, 2024:

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