
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Rentokil Limited issued a 10-year bond on January 1 2011. It pays interest on January
1. The below amortization schedule and interest schedule reflects this. Its year end is
December 31.
a) Indicate whether the bonds were issued at a premium or a discount and explain
how you came to your decision and Compute the stated interest rate and the effective interest rate
c) Prepare the journal entries for the following years:
I. 2011, 2012 & 2018

Transcribed Image Text:Rentokil Limited
Bond Amortization Schedule
Amount
Jan 1 2011
Date
Cash
Interest
unamortized Carrying Value
-
-
5.651
94.349
December 31 2011
11,000
11,322
5.329
94.671
December 31 2012
11,000
11,361
4.968
95.032
December 31 2013
11,000
11.404
4.564
95.436
December 31 2014
11,000
11.452
4.112
95.888
December 31 2015
11,000
11.507
3.605
96.395
December 31 2016
11,000
11.567
3.038
96.962
December 31 2017
11,000
11,635
2.403
97.597
December 31 2018
11,000
11,712
1,691
98,309
December 31 2019
11,000
11.797
894
99.106
December 31 2020
11,000
11,894
100,000
110,000
115.651
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