Question
In: Accounting
1. On January 1, 2020, Travis Corporation issued $800,000, 6%, 5-year bonds for $735,110. The bonds...
1. On January 1, 2020, Travis Corporation issued $800,000, 6%, 5-year bonds for $735,110. The bonds were sold to yield an effective-interest rate of 8%. Interest is paid semiannually on July 1 and January 1. The company uses the effective-interest method of amortization. Instructions: Prepare the journal entries that Travis Corporation would make on January 1, June 30, December 31, 2020, January 1, 2021 and at maturity, related to the bond issue
Solutions
Expert Solution
Face value of bond = $800,000
Price paid for Bond = $735,110
Discount on Bond = $64,890
Coupon Amount = $800000*6%*6/12 = $24,000
Periodic Rate = 8%*6/12 = 4% per period
No. of periods = 5 years * 12/6 months = 10 periods
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ekkarill92 answered 1 year agoRelated Solutions
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I.On
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(Round to the nearest dollar).
MAUVE
INC.
Bond
Discount Amortization
Effective-Interest
Method—Annual Interest Payments
6%
Bonds Issued at 8%
Annual
InterestInterest...
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SHOW LIST OF ACCOUNTS
LINK TO TEXT
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