On June 1, 2014, the Critter Company sold $200,000 in long-term bonds for $175,520. The bonds will mature in 10 years, and have a stated interest rate of 8% and a yield (effective) rate of 10%. The bonds pay interest annually on May 31 of each year. The bond interest is accounted for using the effective interest method. Critter is on a calendar year and does not prepare reversing journal entries. If necessary, round all amounts to the nearest dollar.
(1) Complete the partial bond amortization table below.
Carrying Value of
Cash Interest Expense Discount Amortized Bonds Payable
6/1/14 XXX XX XXXXXX XXXXXXXXXX $
5/31/15 $ $ $ $
5/31/16 $ $ $ $
(2) Prepare journal entries on the following dates (omit journal entry explanations):
June 1, 2014
December 31, 2014
May 31, 2015
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