Chowan Corporation issued $115,000 of 9% bonds dated January 1,2016, for $111,283.65 on January 1, 2016. The bonds are dueDecember 31, 2019, were issued to yield 10%, and pay interestsemiannually on June 30 and December 31. Chowan uses the effectiveinterest method of amortization.
Required:
Prepare the journal entries torecord the issue of the bonds on January 1, 2016, and the interestpayments on June 30, 2016, December 31, 2016, and June 30, 2017. Inaddition, prepare a bond interest expense and discount amortizationschedule for the bonds through June 30, 2017.
Chowan Corporation issued $115,000 of 9% bonds dated January 1,2016, for $111,283.65 on January 1, 2016. The bonds are dueDecember 31, 2019, were issued to yield 10%, and pay interestsemiannually on June 30 and December 31. Chowan uses the effectiveinterest method of amortization.
Required:
| Prepare the journal entries torecord the issue of the bonds on January 1, 2016, and the interestpayments on June 30, 2016, December 31, 2016, and June 30, 2017. Inaddition, prepare a bond interest expense and discount amortizationschedule for the bonds through June 30, 2017. |
Related questions
Effective Interest Discount Amortization
Chowan Corporation issued $190,000 of 10% bonds dated January 1,2013, for $183,982.19 on Janauary 1, 2013. The bonds are dueDecember 31, 2016, were issued to yield 11%, and pay interestsemiannually on June 30 and December 31. Chowan uses the effectiveinterest method of amortization.
In addition, prepare a bond interest expense and discountamortization schedule for the bonds through June 30, 2014.
Chowan Corporation
Bond Interest Expense and Discount Amortization Schedule(Partial)
Effective Interest Method
10% Bonds Sold to Yield 11%
| Date | Cash | Interest Expense | Unmortized Discount | Book Value of Bonds |
| Credit | Debit | Credit | ||
| 01/01/13 | $183,982.19 | |||
| 06/30/13 | $9,500 | $10,119.02 | $619.02 | $????? |
| 12/31/13 | $9,500 | $10,153.07 | $653.07 | $185,254.28 |
| 06/30/14 | $9,500 | $10,188.99 | $688.99 | $185,943.27 |
