On January 1,2016, McKeown, Inc., issued $250,000 of 8%, 9yearbonds for $220,776, yielding a...

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Accounting

On January 1,2016, McKeown, Inc., issued $250,000 of 8%, 9yearbonds for $220,776, yielding a market (yield) rate of 10%.Semiannual interest is payable on June 30 and December 31 of eachyear.
a) Show computations to confirm the bond issue price
b) Prepare journal entries to record the bond issuance,semiannual interest payment and discount amortization on June 30,2016, and semiannual interest payment and discount amortization onDecember 31, 2016. Use the effective interest rate.
c) Post the journal entries from part b) to their respectiveT-accounts
d) Record each of the transactions from part b) in the financialstatement effects template

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4.5 Ratings (902 Votes)

There are two semiannual month in a year so semi annual interst25000008612 10000 semiannual month 9 2 18 Semiannual yeild 10 612 5 Present value of principle See Answer

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In: AccountingOn January 1,2016, McKeown, Inc., issued $250,000 of 8%, 9yearbonds for $220,776, yielding a market...On January 1,2016, McKeown, Inc., issued $250,000 of 8%, 9yearbonds for $220,776, yielding a market (yield) rate of 10%.Semiannual interest is payable on June 30 and December 31 of eachyear.a) Show computations to confirm the bond issue priceb) Prepare journal entries to record the bond issuance,semiannual interest payment and discount amortization on June 30,2016, and semiannual interest payment and discount amortization onDecember 31, 2016. Use the effective interest rate.c) Post the journal entries from part b) to their respectiveT-accountsd) Record each of the transactions from part b) in the financialstatement effects template