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Compute the proceeds from issuance of the bonds

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Reference no: EM132554934

Ash Company issued $100,000 of 7% term bonds on January 1, 2019, due on January 1, 2024. The market rate of interest for these bonds is 8%. Interest is payable annually on December 31.

Required:

Assume that the company uses the effective-interest method of amortizing bond discount.

Question a) Calculate the amount of interest that is actually paid annually.

Question b) Compute the proceeds from issuance of the bonds and discount on bonds payable on January 1, 2019.

Question c) A bond discount amortization schedule for 2019 - 2024.

Question d) Prepare the journal entries to records the following transaction:

i) The issuance of bonds on January 1, 2019 .

ii) The payment of interest and the amortization of the discount on Dec. 31, 2019.

Reference no: EM132554934

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