Purchase Solution

Journal entries for interest and bond amortization

Not what you're looking for?

Ask Custom Question

Morseby Inc. produces and sells voltage regulators. On July 1,2002, Morseby Inc. issued $8,000,000 of ten year , 11% bonds at an effective interest rate of 10%. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year for the company is the calender year.

1. Journalize the entry to record the amount of the cash proceeds form the sale of bonds.

2. Journalize the entries to record the following
a) The first semiannual interest payment on December 31, 2002, including the amortization of the bond premium using the straight line method.
b) The interest payment on June 30, 2003, and the amortization of the bond premium using the straight line method.

3) Determine the total interest expense for 2002.
4) Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? Explain.

Purchase this Solution

Solution Summary

Prepares journal entries for interest payment and bond amortization.

Purchase this Solution

Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Introduction to Finance

This quiz test introductory finance topics.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.