PART I- On November 1, 2020, your company issued $600,000 of 5 year 9% bonds when the interest rate was 8%. The bonds pay interest annually on October 31 each year. Your company uses the interest method of amortization. a. Calculate the bond selling price on November 1, 2020. Please show the factors you entered into your calculator or spreadsheet to calculate the amount. b. Prepare the bond entries from November 1, 2020 through December 31, 2021 (one vear and two months), assuming your company's year ends on December 31 and your company does NOT make reversing entries on January 1. c. Based upon the entries in part "b." indicate any current liabilities (and the balance in the current account) your company would report on the balance sheet on December 31, 2021 (the second year d. Based upon the entries in part "b." indicate any NONcurrent liabilities (and the balance in the account) your company would report on December 31, 2021 (the second year)

PART I- On November 1, 2020, your company issued $600,000 of 5 year 9% bonds when the interest rate was 8%. The bonds pay interest annually on October 31 each year. Your company uses the interest method of amortization. a. Calculate the bond selling price on November 1, 2020. Please show the factors you entered into your calculator or spreadsheet to calculate the amount. b. Prepare the bond entries from November 1, 2020 through December 31, 2021 (one vear and two months), assuming your company's year ends on December 31 and your company does NOT make reversing entries on January 1. c. Based upon the entries in part "b." indicate any current liabilities (and the balance in the current account) your company would report on the balance sheet on December 31, 2021 (the second year d. Based upon the entries in part "b." indicate any NONcurrent liabilities (and the balance in the account) your company would report on December 31, 2021 (the second year)

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 7C

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