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Bond Effective Interest Rate Method of amortization 1. ABC Company sold $1,000,000 of 5% bonds with...

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Accounting

Bond Effective Interest Rate Method of amortization
1. ABC Company sold $1,000,000 of 5% bonds with interest duesemi-annually at 103. They are 5 year bonds. This sale occurredJanuary 1, 2019.
a. Provide an amortization schedule using the effectiveinterest rate method for the entire life of the bond.
b. Show the journal entry for the January sale.
c. Show the journal entry for the first interest paymentdate.

NOTE: A good search term for finding examples is "effectiveinterest rate method example" and "bond issuance price"

Answer & Explanation Solved by verified expert
3.6 Ratings (375 Votes)
ABCDEFGH23a4Face Value of the Bond10000005Bonds issued at10300006Coupon SemiAnnual57SemiAnnual coupon payment250008Period years59Number of semiannual Period1010Semiannual effective interest    See Answer
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