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Posted by: Homeworkhelp
Price Quoted by Student: $7
Posted On: 2011-03-07 02:02:06
 
Question

14-3B  Welch Company issues bonds dated January 1, 2005, with a par value of $250,000. The annual contract rate on them is 9%, and interest is paid semiannually on June 30 and December 31.

 

Exercise 14-3B Effective interest amortization of bond discount

 

Fundamental Accounting Principles, 7th Ed Larson Wild Chiappetta

ANSWER KEY Exercise 14-3B Welch Company issues bonds dated January 1, 2005

 

Exercise 14-3B Welch Company issues bonds dated January 1, 2005, with a par value of $250,000. The annual contract rate on them is 9%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $231,570.

 

1. What is the amount of the discount on these bonds at issuance?

2. How much total bond interest expense will be recognized over the life of these bonds?

3. Prepare an amortization table like the one in Exhibit 14B.1 for these bonds; use the effective interest method to amortize the discount.


Solutions
ANSWER KEY Exercise 14-3B Welch Company issues bon
Price $7
Attachment 1: E 14-3B Welch Company issues.doc
Solution Posted By: Homeworkhelp    Posted on: 07-03-2011