Grove Corporation issued $4,000,000 of 8% bonds on October 1, 2014, due on Octob

Question

Grove Corporation issued $4,000,000 of 8% bonds on October 1, 2014, due on October 1, 2019. The interest is to be paid twice a year on April 1 and October 1. The bonds were sold to yield 10% effective annual interest. Grove Corporation closes its books annually on December 31. Instructions (a) Complete the following amortization schedule for the dates indicated. (Round all answers to the nearest dollar.) Use the effective-interest method. Debit Credit Carrying Amount Credit Cash Interest Expense Bond Discount of Bonds October 1, 2014 $3,691,117 April 1, 2015 October 1, 2015 (b) Prepare the adjusting entry for December 31, 2015. Use the effective-interest method. (c) Compute the interest expense to be reported in the income statement for the year ended December 31, 2015

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Part A:

----

Part B:

-----

Part C:

Interest Expense to be Reported = 184556*1/2 + 185784 + 93536 = $371598

Thanks.

Credit Cash Debit Interest Expense Credit Bond Discount Carrying Amount of Bonds April 1 2014 3691117 April 1 2015 160000 184556 24556 3715673 October 1, 2015 160000 185784 25784 3741457

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.