On 1-1-2014 Avion, Inc. Sold Bonds with these particulars: Face amt. of Bonds $
ID: 2503207 • Letter: O
Question
On 1-1-2014 Avion, Inc. Sold Bonds with these particulars:
Face amt. of Bonds $475,000
Matures on 1-1-2024, in 10 yrs.
Stated annual rate of int. 8.75%
Effective annual rate of interest 8.00%
Int. is paid every six months; 6-30, 12-31
Req. 1, Assume the effective Interest Method in accounting for these Bonds, build a 10 year amortization table
Req. 2, Give General Journal entries to record the sale of the bonds, and the 1st 4 interest payments
Explanation / Answer
Req. 1, Assume the effective Interest Method in accounting for these Bonds, build a 10 year amortization tabl
Req. 2, Give General Journal entries to record the sale of the bonds, and the 1st 4 interest payments
Amount Paid Interest Premium Amortised Bond Value Balance of Premium on issue of Bond
475000 $24,207.77 1 20781.25 19,968.00 813.25 475000 $23,394.52 2 20781.25 19,935.78 845.47 475000 $22,549.05 3 20781.25 19,901.96 879.29 475000 $21,669.76 4 20781.25 19,866.79 914.46 475000 $20,755.30 5 20781.25 19,830.21 951.04 475000 $19,804.26 6 20781.25 19,792.17 989.08 475000 $18,815.18 7 20781.25 19,752.61 1,028.64 475000 $17,786.54 8 20781.25 19,711.46 1,069.79 475000 $16,716.75 9 20781.25 19,668.67 1,112.58 475000 $15,604.17 10 20781.25 19,624.17 1,157.08 475000 $14,447.09 11 20781.25 19,577.88 1,203.37 475000 $13,243.72 12 20781.25 19,529.75 1,251.50 475000 $11,992.22 13 20781.25 19,479.69 1,301.56 475000 $10,690.66 14 20781.25 19,427.63 1,353.62 475000 $9,337.04 15 20781.25 19,373.48 1,407.77 475000 $7,929.27 16 20781.25 19,317.17 1,464.08 475000 $6,465.19 17 20781.25 19,258.61 1,522.64 475000 $4,942.55 18 20781.25 19,197.70 1,583.55 475000 $3,359.00 19 20781.25 19,134.36 1,646.89 475000 $1,712.11 20 20781.25 19,069.14 1,712.11 475000 ($0.00)
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