Activity 2 - In-Class Activity#2(30 points List the two...

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In-Class Activity #2 (30 points) List the two members of today’s activity _________________________________ _________________________________ ABC incorporated issued bonds on January 1, 2007: The bonds have a face value of $1,000,000 The bonds make interest payments on June 30 th and December 31 st of each year. The stated rate on the bonds is 5% The annual effective rate for the bonds is 6% (3% per 6 months) The bonds mature on January 1, 2017 The company uses the effective interest method to amortize premiums or discounts The company incurred legal costs associated with the issuance of the bonds that totaled $80,000. Bond issuance costs are amortized on a straight-line basis. 1. State all journal entries necessary on January 1, 2007? (10 points) Cash 925,613=0.55368*1000000 + 14.87747*25000 Discount on Bonds Payable 74,387 Bonds Payable 1,000,000 Unamortized bonds issuance costs 80,000 Cash 80,000 2. State the journal entry to recognize interest expense on June 30 th 2007? (10 points) Interest Expense 27,768 Discount on Bonds Payable 2,768 Cash 25,000 3. What is the balance of unamortized bond issuance costs on January 1, 2008 (10 points) 72,000=90%*80,000
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In-Class Activity #2 (30 points) List the two members of today’s activity _________________________________ _________________________________ ABC incorporated issued bonds on January 1, 2007: The bonds have a face value of $1,000,000 The bonds make interest payments on June 30 th and December 31 st of each year. The stated rate on the bonds is 7% The annual effective rate for the bonds is 6% (3% per 6 months) The bonds mature on January 1, 2017 The company uses the effective interest method to amortize premiums or discounts The company incurred legal costs associated with the issuance of the bonds that totaled $60,000.
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