HW2: ABC Co. acquired the $100,000, 6% bonds on 2001/12/31. Market price of the bonds: $102,723 (including brokerage fee of $153). Effective interest rate is 5%. Bond interests are payable on 12/31. ABC attempts to collect the cash flows and sell. It prepares the following bond amortization schedule. ABC sold the bonds on 2004/9/30. Prepare related journal entries for each period.
Periods Cash Interest Revenue Premium Amortization Carrying Value
2001/12/31 102,723
2002/12/31 6,000 5,136 864 101,859
2003/12/31 6,000 5,093 907 100,952
2004/12/31 6,000 5,048 952 100,000
The fair market value of the bonds are as follows:
Periods Fair Market Value
2002/12/31 104,200
2003/12/31 103,000
2004/9/30 105,500
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HW2: ABC Co. acquired the $100,000, 6% bonds on 2001/12/31. Market price of the bonds: $102,723 (inc...
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