On January 1, 2014, Oaken Furniture Co. issued $700,000 of 10%bonds and received cash totaling $795,141. Interest is payablesemiannually on January 1 and July 1. The maturity date on thesebonds is January 1, 2024. The firm uses the effective âinterestmethod of amortizing discounts and premiums. The bonds were sold toyield an effective interest rate of 8%. Oaken Furniture Co. is acalendar-year corporation. 1) Prepare an amortization table throughthe first two periods (7/1/14 & 1/1/15) using the effectiveinterest method. 2) Prepare the journal entries to record bondrelated transacations as of the following dates: a) January 1, 2014b) July 1, 2014 c) December 31,2014
On January 1, 2014, Oaken Furniture Co. issued $700,000 of 10%bonds and received cash totaling $795,141. Interest is payablesemiannually on January 1 and July 1. The maturity date on thesebonds is January 1, 2024. The firm uses the effective âinterestmethod of amortizing discounts and premiums. The bonds were sold toyield an effective interest rate of 8%. Oaken Furniture Co. is acalendar-year corporation. 1) Prepare an amortization table throughthe first two periods (7/1/14 & 1/1/15) using the effectiveinterest method. 2) Prepare the journal entries to record bondrelated transacations as of the following dates: a) January 1, 2014b) July 1, 2014 c) December 31,2014
Related questions
| On January 1, 2015, Piper Co. issued ten-year bonds with a facevalue of $3,000,000 and a stated interest rate of 10%, payablesemiannually on June 30 and December 31. The bonds were sold toyield 12%. Table values are:
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| Calculate the issue price of the bonds.
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Without prejudice to your solution in part (a), assume that theissue price was $2,652,000. Prepare the amortization table for2015, assuming that amortization is recorded on interest paymentdates using the effective-interest method. |
Date Cash Expense Amortization Carrying Amount
1/1/15
6/30/15
12/31/15
