Practice final BBUS3211_SW2_PE_10JUL12

3 on july 1 2012 peach inc issued 400000 par value

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Unformatted text preview: mium or discount amortization have been recorded through January 1, 2012. c. Prepare the journal entry on July 1, 2012 to record interest and premium or discount amortization. 2. On January 1 of the current year, Lemon Ltd. issued $500,000 (par value) 10%, six year bonds when the market rate was 9%, receiving $522,430 cash proceeds. Interest is payable annually on December 31. The corporation uses the effective interest method for amortization of bond premium or discount. a. Calculate the interest expense for the first year. b. Calculate the interest expense for the second year. 3. On July 1, 2012, Peach Inc. issued $400,000 (par value) 10%, ten year bonds, with interest payable semi‐annually on January 1 and July 1. The bonds were issued at $454,360 (to yield 8%). The corporation uses the effective interest method for amortization of bond premium or discount. a. Prepare the journal entry on the date the bonds were issued. b. Prepare the adjusting entry at December 31, 2012, the end of the fiscal year. c. Prepa...
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This note was uploaded on 02/05/2014 for the course BUS 370 taught by Professor Andreathomas during the Spring '13 term at Capital University.

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