90.2K

Verified Solution

Link Copied!

Amortize Discount by Interest Method

On the first day of its fiscal year, Ebert Company issued $16,000,000 of 5-year, 10% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Ebert receiving cash of $14,822,472. The company uses the interest method.

a. Journalize the entries to record the following:

1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

	Cash
	Discount on Bonds Payable
	Bonds Payable

2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

	Interest Expense
	Discount on Bonds Payable
	Cash

3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

	Interest Expense
	Discount on Bonds Payable
	Cash

b. Compute the amount of the bond interest expense for the first year. Round to the nearest dollar.

Annual interest paid
Discount amortized
Interest expense for first year

Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $16,000,000 of year, 10% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a marvet effective interest of 12%, resulting in Ebert receiving cash of $14,822.472. The company uses the interest method. a. Journal the entries to record the following: 1. Sule of the bonds. Round to the nearest dollar. 17 an amount box does not require an entry leave it blank Cash Discount on Bonds Payable Bonds Payable ID0 010 Ch 2. Fist semiannual interest payment, including amortization of discount, Round to the nearest dollar. If an amount how does not require an entry leave it bank Interest Expense Discount on Bonds Payable OUD bol Cash Second semana trestament, indiating motion of count. Round to the nearest della If an amount box does not require an entry leave it bank Interest Expense Discount on Bonds Payable 000 Cash b. Compute the amount of the bond interest expense for the first year. Round to the nearest dollar Annual interest paid Discount amortized Interest expense for first year $ Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $16,000,000 of year, 10% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a marvet effective interest of 12%, resulting in Ebert receiving cash of $14,822.472. The company uses the interest method. a. Journal the entries to record the following: 1. Sule of the bonds. Round to the nearest dollar. 17 an amount box does not require an entry leave it blank Cash Discount on Bonds Payable Bonds Payable ID0 010 Ch 2. Fist semiannual interest payment, including amortization of discount, Round to the nearest dollar. If an amount how does not require an entry leave it bank Interest Expense Discount on Bonds Payable OUD bol Cash Second semana trestament, indiating motion of count. Round to the nearest della If an amount box does not require an entry leave it bank Interest Expense Discount on Bonds Payable 000 Cash b. Compute the amount of the bond interest expense for the first year. Round to the nearest dollar Annual interest paid Discount amortized Interest expense for first year $

Answer & Explanation Solved by verified expert

See Answer