The book value of the bond at the end of year 10 is 1,160
What is the basis for determining premium amortization?
The bond premium amortization is assumed to be determined using the straight-line basis such that bond premium amortized in each year is the same for 18 years of bond investment, in other words, the year 10 bond premium amortization of 20 is the same for all other years.
Total premium on bond issuance=20*18
total premium on bond issuance=360
bond price issued price=par value+ premium=1000+360=1360
As at the end of the 10th year, bond premium amortized thus far is 20 multiplied by 10 years
bond premium amortized=20*10=200
book value of the bond at the end of year 10=1360-200
book value of the bond at the end of year 10=1,160
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Answer:
Nov 1 Cash $2,300,000 Dr
Notes Payable $2300,000 Cr
Dec 31 Interest Expense $34,500 Dr
Interest Payable $34,500 Cr
Explanation:
The interest is payable at maturity that is at the start of May as the nite is for six months. However, at the end of the period the adjusting entry will be made. On 31 December the 2 months interest is accrued. The expense relates to this period so will be recorded as an expense and as a payable.
The 9% is the annual rate.
the annual Interets is 2300000*0.09 = 207000
So, the 2 month interest will be = 207000 * 2/12 = 34500
Answer:
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Explanation:
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