Company A issued $3.12 million of 7-year 3% bonds at $2,755,244. The bonds were dated...
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Company A issued $3.12 million of 7-year 3% bonds at $2,755,244. The bonds were dated January 1, 2021 and pay interest semi-annually on January 1 and July 1. The market rate of interest was 5% for these bonds. Company A has a December 31 year-end.
- Were the bonds issued at a premium or a discount? Why? (2 marks)
- Prepare an amortization schedule for the first three interest payments. (12 marks)
- Prepare the journal entry to record the first interest payment on July 1, 2021. (3 marks)
- Prepare the journal entry to record the accrual of interest on December 31, 2021. (3 marks)
- Prepare the journal entry to record the second interest payment on January 1, 2022. (2 marks)
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