Bonds payable with a premium2

Bonds payable with a premium2 - c. Prepare the appropriate...

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1 Bonds Payable issued at a premium PROBLEM: On January 1, 20x1, Bullwinkle Corp issued $500,000 of 12% 15-year bonds (interest is paid semi-annually on June 30 and December 31). The market rate of interest is determined to be 8%. All interest rates are stated as annual rates. REQUIRED: 1. Using the above data, please prepare a spreadsheet using the headings below. Please round the printed amounts to the nearest penny. Date Cash Payment of Interest Interest Expense Premium Amortization Premium Balance Carrying Value 2. On a separate sheet of paper, prepare the following journal entries and short answers. a. Prepare the journal entry to record the January 1, 20x1 transaction on Bullwinkle's books. b. Prepare the appropriate journal entry on Bullwinkle's books for June 30, 20x1, using the effective interest method.
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Unformatted text preview: c. Prepare the appropriate journal entry on Bullwinkle's books for December 31, 20x1, using the effective interest method. d. Prepare the appropriate journal entry on Bullwinkle's books for June 30, 20x2, using the effective interest method. e. Prepare the appropriate journal entry on Bullwinkle's books for December 31, 20x2, using the effective interest method. 2 a. 500,000 0.30832 154160 30,000 17.29203 518760.9 672920.9 500,000 12% / 2 = 6% 30000 From PV Tables b. 672921 8% / 2 = 4% 26916.84 Int Exp 26916.84 Prm Amt 3083.16 Cash 30000 c 672921-3083 669838 669838 8% / 2 = 4% 26793.52 Int Exp 26793.52 Prm Amt 3206.48 Cash 30000 d 672921 (3083 plus 3207) 666,631 666631 8% / 2 = 4% 26665.24 Int Exp 26665.24 Prm Amt 3334.76 Cash 30000...
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This note was uploaded on 11/10/2011 for the course ACCT 3367 taught by Professor Staff during the Fall '08 term at University of Houston.

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Bonds payable with a premium2 - c. Prepare the appropriate...

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