On January 1, 2018, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 5 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 4.25 percent, so the total proceeds from the bond issue were $102,070. Methodical uses the effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2-5. Prepare the journal entry to record the bond issue, interest payments on December 31, 2018 and 2019, interest and face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020, at a price of 102. Next Visit question map Question 7 of 10 Total 7 of 10 Prev
Period |
Effective interest @4.25% |
Interest paid @5% |
Plug for premium amortization |
Bonds carrying value |
0 |
- |
- |
- |
102,070 |
1 |
4,338 |
5,000 |
662 |
101,408 |
2 |
4,310 |
5,000 |
690 |
100,718 |
3 |
4,281 |
5,000 |
719 |
99,998 |
100,000 |
||||
2 |
||||
This difference of $2 is a rounding off error. |
I am supposed to answer only the first question. Please note for each additional question you need to create separate questions.
On January 1, 2018, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000,...
On January 1, 2018, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 5 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 4.25 percent, so the total proceeds from the bond issue were $102,070. Methodical uses the effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare...
On January 1, 2018, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 5 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market interest rate was 4.00 percent, so the total proceeds from the bond issue were $102,776. Methodical uses the simplified effective interest bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required:...
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On January 1, 2018, Surreal Manufacturing issued 630 bonds, each
with a face value of $1,000, a stated interest rate of 3 percent
paid annually on December 31, and a maturity date of December 31,
2020. On the issue date, the market interest rate was 4 percent, so
the total proceeds from the bond issue were $612,519. Surreal uses
the effective-interest bond amortization method and adjusts for any
rounding errors when recording interest in the final year.Required:1. Prepare a bond...
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On January 1, 2018, Surreal Manufacturing issued 530 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market Interest rate was 4 percent, so the total proceeds from the bond issue were $515,294. Surreal uses the effective-Interest bond amortization method and adjusts for any rounding errors when recording Interest in the final year. Required: 1. Prepare...
On January 1, 2018, Surreal Manufacturing issued 660 bonds, each with a face value of $1,000, a stated interest rate of 3 percent pald annually on December 31, and a maturity date of December 31, 2020. On the issue date, the market Interest rate was 4 percent, so the total proceeds from the bond issue were $641,687. Surreal uses the simplified effective-Interest bond amortization method and adjusts for any rounding errors when recording Interest in the final year. Required: 1....
On January 1, 2018, Loop Raceway issued 700 bonds, each with a
face value of $1,000, a stated interest rate of 6 percent paid
annually on December 31, and a maturity date of December 31, 2020.
On the issue date, the market interest rate was 7 percent, so the
total proceeds from the bond issue were $681,631. Loop uses the
straight-line bond amortization method and adjusts for any rounding
errors when recording interest in the final year.
Required:
1. Prepare...