Solution-Record the journal entry for account for interest

Record the journal entry for account for interest

Assignment Help Financial Accounting

Reference no: EM132495328

On January 1, 2020, Bennett Corporation issued one 4-year, 10% (stated rate), $1,000 bond at a price which would yield the purchaser an 8% return. Payment of interest is made on December 31. The year end is December 31. The company uses the 'effective interest' method to account for bond interest.

RV of $ 1					pY al 1	5%	8%	9%	0%
									0%
Period 1	.9524	.9259	.9174	.9091	Period 1	.9524	.9259	.9174	.9091
Period 2	.9070	.8573	.8417	.8264	Period 2	1.8594	1.7833	13591	13355
Period 3	.8638	.7938	.7722	.7513	Period 3	2.7232	2.5771	2.5313	14868
Period 4	.8227	3350	3084	.6830	Period 4	15460	3.3121	3.2397	3.1699

Required:

Question 1. Prepare the entry to record the sale of the bond on January 1, 2020.

Question 2. Prepare the entry on December 31, 2020.

Question 3. Assume that Bennett used the 'straight-line' method to account for bond interest. Record the journal entry for 2021 to account for interest.

Question 4. Assume that Bennett repurchased the bond for $1,120 on January 1, 2021. Prepare the journal entry to record the repurchase. (Company had used the 'effective interest' method.)

Reference no: EM132495328

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Record the journal entry for account for interest

Reference no: EM132495328

Reference no: EM132495328

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