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  3. on january 1, 2018 the white company issued 25-yea

On January 1, 2018 the White Company issued 25-year, 9% bonds with a par value...

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Verified Solution

Question

Accounting

On

January

1,

2018

the

White

Company

issued

25-year,

9%

bonds

with

a

par

value

of

$1,600,000

when

the

market

rate

of

interest

was

8%.

The

bonds

pay

interest

annually

on

December

31.

Required:

1.

Compute

the

proceeds

from

the

issuance

of

the

bonds.

2.

Prepare

the

entry

to

record

the

issuance

of

the

bonds.

3.

Prepare

the

entries

to

record

the

amortization

and

interest

payment

for

each

of

the

first

two

years

assuming

straight-line

amortization.

4.

Prepare

the

entries

to

record

the

amortization

and

interest

payment

for

each

of

the

first

two

years

assuming

effective-rate

amortization.

Be

sure

to

prepare

an

amortization

schedule.

5.

Prepare

the

entry

to

record

the

retirement

of

the

bonds

at

the

maturity

date.

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