On March 1, 2011, Fast Freight Company sold Rs. 400,000 of its 9 percent, 20-year bonds at 109.9. The semiannual interest payment dates are March 1 and September 1. The market interest rate is 8 percent. The firm's fiscal year ends August 31. Prepare entries in journal form to record the sale of the bonds on March 1, the accrual of interest and amortization of premium on August 31, and the first inferest payment September 1. Use the effective interest method to anmortize the premium.

On March 1, 2011, Fast Freight Company sold Rs. 400,000 of its 9 percent, 20-year bonds at 109.9. The semiannual interest payment dates are March 1 and September 1. The market interest rate is 8 percent. The firm's fiscal year ends August 31. Prepare entries in journal form to record the sale of the bonds on March 1, the accrual of interest and amortization of premium on August 31, and the first inferest payment September 1. Use the effective interest method to anmortize the premium.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 6PB

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