First two interest periods using effective-interest method

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Reference no: EM13751971

On March 1, 2014, Oaken Furniture Co. issued $700,000 of 10 percent bonds to yield 8 percent. Interest is payable semiannually on February 28 and August 31. The bonds mature in 10 years. Oaken Furniture Co. is a calendar-year corporation.

a) Determine the issue price of the bonds. Show your computations.

b) Prepare an amortization table through the first two interest periods using the effective-interest method.

c) Prepare the journal entries to record bond-related transactions as of the following dates:

1) March 1, 2014

2) August 31, 2014

3) December 31, 2014

4) February 28, 2015

Reference no: EM13751971

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