On April 30, Year 1, Augusta Corporation issued $5,000,000 of 4% 10-year bonds paying interest semi-annually on April 30 and October 31. The bonds were sold for $5,166,715 to yield 3.6%. Augusta’s year-end is December 31. Instructions: a) Prepare a bond amortization table for the first 4 interest periods. b) Journalize the following entries: Issue of the bonds October 31, Year 1, interest payment December 31, Year 1 interest accrual April 30, Year 2, interest payment October 31, Year 2, interest payment December 31, Year 2 interest accrual April 30, Year 3, interest payment
On April 30, Year 1, Augusta Corporation issued $5,000,000 of 4% 10-year bonds paying interest semi-annually on April 30 and October 31. The bonds were sold for $5,166,715 to yield 3.6%. Augusta’s year-end is December 31. Instructions: a) Prepare a bond amortization table for the first 4 interest periods. b) Journalize the following entries: Issue of the bonds October 31, Year 1, interest payment December 31, Year 1 interest accrual April 30, Year 2, interest payment October 31, Year 2, interest payment December 31, Year 2 interest accrual April 30, Year 3, interest payment
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 15MCQ
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Question
On April 30, Year 1, Augusta Corporation issued $5,000,000 of 4% 10-year bonds paying interest semi-annually on April 30 and October 31. The bonds were sold for $5,166,715 to yield 3.6%. Augusta’s year-end is December 31.
Instructions:
-
a) Prepare a bond amortization table for the first 4 interest periods.
-
b) Journalize the following entries:
Issue of the bonds
-
October 31, Year 1, interest payment
-
December 31, Year 1 interest accrual
-
April 30, Year 2, interest payment
-
October 31, Year 2, interest payment
-
December 31, Year 2 interest accrual
-
April 30, Year 3, interest payment
-
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