On October 31, 2021, Flowing Wind Company issued a $3,500,000, 10-year bond at 7% when the market rate was 8%. It was sold at 93, and they will account for interest on the bond using the effective interest rate calculation method. Interest payments are made on April 30, and October 31 of each year. Party Décor Company's year-end is December 31. Required: 1) Prepare the appropriate journal entries related to this bond for 2021, including all calculation 2) Show the bonds payable net value reported on the balance sheet as of December 31, 2021 3) Prepare the journal entry related to the first interest payment in 2022, including all calculations.
On October 31, 2021, Flowing Wind Company issued a $3,500,000, 10-year bond at 7% when the market rate was 8%. It was sold at 93, and they will account for interest on the bond using the effective interest rate calculation method. Interest payments are made on April 30, and October 31 of each year. Party Décor Company's year-end is December 31. Required: 1) Prepare the appropriate journal entries related to this bond for 2021, including all calculation 2) Show the bonds payable net value reported on the balance sheet as of December 31, 2021 3) Prepare the journal entry related to the first interest payment in 2022, including all calculations.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 6PA: Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...
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