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test 1 morning real _ Spring 2010

# test 1 morning real _ Spring 2010 - Name Acct3312 Spring...

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Name: __________________________ Acct3312 Spring 2010 Test 1 1. Bond interest and discount amortization. Grove Corporation issued \$800,000 of 10% bonds on October 1, 2010, due on October 1, 2015. The interest is to be paid twice a year on April 1 and October 1. The bonds were sold to yield 8% effective annual interest. The proceeds of the bonds were \$864,887. Grove Corporation closes its books annually on December 31. Instructions (a) Complete the following amortization schedule for the dates indicated. (Round all answers to the nearest dollar.) Use the effective-interest method. (b) Prepare the adjusting entry for December 31, 2011. Use the effective-interest method. (c) Compute the interest expense to be reported in the income statement for the year ended December 31, 2011. a) Credit Debit Debit Carrying Value Cash Interest Expense Bond Premium Of Bonds October 1, 2010 *****************Date of Sale***************** \$ \$864,887. . April 1, 2011 40000 =.04*864884 5405.51 859482.65 October 1, 2011 40000 34379 5621 853861.96 April 1, 2012 40000 34154.48 5845.52 b) debit credit Interest Expense 17077 Bond Prem 2923 Interest Payable 20000 c) \$68754

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test 1 morning real _ Spring 2010 - Name Acct3312 Spring...

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