Explore BrainMass

Explore BrainMass

    Bond Interest and Amortization - Journal entries

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Here's what I have so far as answer. Please review it carefully. I am stumped on the final two questions. So any insight would be GREATLY appreciated.

    Instructions:
    (a) (1) Prepare the journal entry to record the issuance of the bonds on July 1, 2002.

    (a) (2) Prepare the journal entry to record the accrual of interest and the amortization of the premium on December 31, 2002.

    (a) (3) Prepare the journal entry to record the payment of interest and the amortization of the premium on July 1, 2003.

    (a) (4) Prepare the journal entry to record the accrual of interest and the amortization of the premium on December 31, 2003.

    Please see attached.

    Problem P11-8A
    On July 1,2002, Imperial Oil Company issued bonds with the following detail:
    Face value: $2,000,000
    Sale price: 2,249,245
    Face interest rate: 12%
    Life in years: 10 years
    This price resulted in an effective interest on the bonds of 10%
    Imperial Oil uses the effective interest rate method to amortize bond premium or discount. The bonds pay semiannual
    interest on each July and January 1st.

    © BrainMass Inc. brainmass.com June 3, 2020, 5:58 pm ad1c9bdddf
    https://brainmass.com/business/finance/43440

    Attachments

    Solution Summary

    The solution provides journal entries to bond interest expense and amortization of premium

    $2.19

    ADVERTISEMENT