On January 1, 2017, Natifah Inc. acquires $500,000 of 8% bonds at a price of $552,970. The interest is payable each December 31, and the bonds mature December 31, 2037. The investment will provide Natifah Inc. a 7% yield. The bonds are classified as held-to-maturity. (2a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method. Date Cash Received Interest Revenue Amortization Carrying Amount (2b) Prepare the journal entry for the interest receipt of December 31, 2018, and the discount amortization under the effective interest method.
On January 1, 2017, Natifah Inc. acquires $500,000 of 8% bonds at a price of $552,970. The interest is payable each December 31, and the bonds mature December 31, 2037. The investment will provide Natifah Inc. a 7% yield. The bonds are classified as held-to-maturity. (2a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method. Date Cash Received Interest Revenue Amortization Carrying Amount (2b) Prepare the journal entry for the interest receipt of December 31, 2018, and the discount amortization under the effective interest method.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 5P: Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and...
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On January 1, 2017, Natifah Inc. acquires $500,000 of 8% bonds at a price of $552,970. The interest is payable each December 31, and the bonds mature December 31, 2037. The investment will provide Natifah Inc. a 7% yield. The bonds are classified as held-to-maturity.
(2a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method.
Date |
Cash Received |
Interest Revenue |
Amortization |
Carrying Amount |
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(2b) Prepare the
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