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Record the journal entry for account for interest

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Question - On January 1, 2020, Bristol Corporation issued one 3-year, 10% (stated rate), $20,000 bond at a price which would yield the purchaser an 9% 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.

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

2. Prepare a bond amortization schedule in good form for the bond.

3. Prepare the entry on December 31, 2020.

4. Assume that Bristol used the 'straight-line' method to account for bond interest. Record the journal entry for 2022 to account for interest.

5. Assume that Bristol repurchased the bond for $20,600 on January 1, 2021. Prepare the journal entry to record the repurchase. (Company had used the 'effective interest' method.)

6. Calculate the price of the bond if the bond had been issued on Oct. 1, 2020. Prepare the entry on that date for the issue of the bond. (Assume same rates as per information above.)

Reference no: EM132573180

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