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Bond Review Problems - can be completed in groups, due in DC Connect dropbox by noon on Saturday, September 30 th. Question 1: Bonds Issued at Par...

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Bond Review Problems – can be completed in groups, due in DC Connect dropbox by noon on Saturday, September 30 th . Question 1: Bonds Issued at Par Value Assume that Durham Corporation issued $100,000, 10-year, 9%, bonds dated February 1, 2017 at $100,000 (100% of face value). Interest on bonds is payable semi-annually on August 1 and February 1. The bonds are reported in the long-term section of the balance sheet since the maturity date is more than one year away. Record the following entries: a) The entry to record the issue of the bonds on February 1, 2017 b) The entry to record the first semi-annual interest payment on August 1, 2017 General Journal Date Account Titles and Explanation Debit Credit Assume that the bonds were issued on May 1, 2017 instead of February 1, 2017 . The purchasers of the bonds pay the purchase price plus any accrued interest on the bonds. The purchasers will receive the full 6 months’ interest on August 1, 2017. Record the following entries: a) The entry to record the sale of the bonds on May 1, 2017, plus accrued interest b) The entry to record the first interest payment on August 1, 2017 General Journal Date Account Titles and Explanation Debit Credit Question 2: Bonds issued at a Discount
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On February 1, 2017, Fireswirl Corp. issued a $900,000, 5% two-year bond. Interest is payable semi-annually each August 1, and February 1. a) Calculate the bond issue price assuming a market interest rate of 6% on the date of issue. b) Using the effective interest method, prepare an amortization schedule for the term of the bond. c) Record the entry for the issuance of the bond on February 1, the adjusting entry to accrue bond interest and related amortization on March 31, 2017, Fireswirl Corp’s year- end, and the payment of interest on August 1, 2017. Period ending Cash interest paid Period interest expense Discount/ Premium Amortizatio n Unamortized discount/ premium Carrying value General Journal Date Account Titles and Explanation Debit Credit
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bond questions.xlsx

1
Date
Explanation
2/1/2017 Cash
Bonds Payable Debit
Credit
$
100,000
$
100,000 8/1/2017 Interest Expense
Cash $ 4,500
$ Date
Explanation
5/1/2017 Cash
Bonds Payable
Interest Payable 4,500 Debit...

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