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E17-5B (Effective-Interest versus Straight-Line Bond Amortization) On January 1, 2014, Falcon Electro acquires $400,000 of 8% bonds at a price of $442,376. The interest is payable each December 31, and the bonds mature December 31, 2034. The investment wi

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E17-5B (Effective-Interest versus Straight-Line Bond Amortization) On January 1, 2014, Falcon Electro acquires $400,000 of 8% bonds at a price of $442,376. The interest is payable each December 31, and the bonds mature December 31, 2034. The investment will provide Falcon Electro a 7% yield. The bonds are classified as held-to-maturity.;Instructions;(a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method.;(b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method.;(c) Prepare the journal entry for the interest receipt of December 31, 2015, and the discount amortization under the straight-line method.;(d) Prepare the journal entry for the interest receipt of December 31, 2015, and the discount amortization under the effective-interest method.

 

Paper#78469 | Written in 18-Jul-2015

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