Question

In: Accounting

On June 1, 2020, JetCom Inventors Inc. issued a $480,000 8%, three-year bond. Interest is to...

On June 1, 2020, JetCom Inventors Inc. issued a $480,000 8%, three-year bond. Interest is to be paid semiannually beginning December 1, 2020.

Required:
a. Calculate the issue price of the bond assuming a market interest rate of 9%. (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.)



b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)



Part 1
Prepare journal entries to the following. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

a. Issuance of the bonds on June 1, 2020
b. Payment of interest on December 1, 2020
c. Adjusting entry to accrue bond interest and discount amortization on January 31, 2021
d. Payment of interest on June 1, 2021

Assume JetCom Inventors Inc. has a January 31 year-end.



Part 2
Show how the bonds will appear on the balance sheet under non-current liabilities at January 31, 2022. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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