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Sandhill Corporation issued $2.76 million of 7-year, 1% bonds dated January 1, 2021, for $2,413,803. The...

Sandhill Corporation issued $2.76 million of 7-year, 1% bonds dated January 1, 2021, for $2,413,803. The market interest rate when the bonds were issued was 3%. Interest is payable semi-annually on January 1 and July 1. Sandhill has a December 31 year end.
Prepare an amortization schedule for the first three interest payments. (Round answers to 0 decimal places, e.g. 5,276.)
SANDHILL CORPORATION
Bond Amortization Table
Effective Interest Method—Semi-Annual Interest Payments
1% Bonds Issued at market rate of 3%
Date Interest Payment Interest Expense Discount Amortization Bond Amortized Cost
Jan. 1, 2021 $ $ $ $
July 1, 2021
Jan. 1, 2022
July 1, 2022

SHOW LIST OF ACCOUNTS
Prepare the journal entry to record the first interest payment on July 1, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

July 1, 2021
(To record interest payment.)

SHOW LIST OF ACCOUNTS
Prepare the adjusting journal entry on December 31, 2021, to accrue the interest expense. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2021
(To accrue interest expense.)

SHOW LIST OF ACCOUNTS
Prepare the journal entry for the payment of interest on January 1, 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 1, 2022

Solutions

Expert Solution

Face Value of Bonds = $2,760,000
Issue Value of Bonds = $2,413,803

Annual Coupon Rate = 1.00%
Semiannual Coupon Rate = 0.50%
Semiannual Coupon = 0.50% * $2,760,000
Semiannual Coupon = $13,800

Annual Interest Rate = 3.00%
Semiannual Interest Rate = 1.50%

ekkarill92 answered 2 years ago
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