On 1/1/2001, General Machine Co. issued $1,000,000 10-year bonds with a market rate (i.e., yield)...
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Accounting
On 1/1/2001, General Machine Co. issued $1,000,000 10-year bonds with a market rate (i.e., yield) of 15%. The coupon rate is 12%. Interests are paid annually on 12/31.
Determine the selling price of the bond on the issue date. Is it issued at a premium or discount?
2. Provide the journal entries to record the bond issuance above.
3. Prepare the bond amortization table using the effective interest method.
4. What is the interest expense for General Machine in the fiscal year that ended 12/31/2001? Provide the journal entries to record the interest expense.
5. What is the net borrowing (i.e., net book value of bond) of General Machine as of 12/31/2001 after making the first coupon payment?
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