Moresby, Inc produces & sells voltage regulators. On july 1, 2002 Moresby Inc issued $8,000,000 of ten-year. 11% bonds at an effective interest rate of 10%. Interest on the bonds is payable semiannually on Dec 31 & June 30. Fiscal year for company is the calendar year.
Instructions
1. Journalize the entry to record the amount of the cash proceeds from the sale of the bonds. (How to set up table & compute cash proceeds?)
2. Journalize the entries to record the following
a. First semiannual interest payment on Dec 31, 2002, including the amortization of the bond premium, using straight-line method
b. The interest payment on June 30, 2003 & the amortization of the bond premium, using staright-line method.
3. Determine the total interest expense for 2002.
4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? Explain.
2007-11-27
17:37:00
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3 answers
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asked by
Kerrie D
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Other - Business & Finance