On October 1, 2010, Noller Company issued $3,000,000 par value, 10%, 10-year bonds dated July 1, 2010, with interest payable semiannually on January 1 and July 1

On October 1, 2010, Noller Company issued $3,000,000 par value, 10%, 10-year bonds dated July 1, 2010, with interest payable semiannually on January 1 and July 1. The bonds are issued at $3,406,500 (to yield 8%) plus accrued interest. The effective interest method is used.

(a) Prepare the journal entry at the date the bonds are issued.
(c) Prepare the entry for the interest payment on January 1, 2011.
(b) Prepare the adjusting entry at December 31, 2010, the end of the fiscal year.


Click here for the solution: On October 1, 2010, Noller Company issued $3,000,000 par value, 10%, 10-year bonds dated July 1, 2010, with interest payable semiannually on January 1 and July 1

On January 1, 2011, Lowry Co. issued ten-year bonds with a face value of $5,000,000 and a stated interest rate of 8%, payable semiannually on June 30 and December 31

On January 1, 2011, Lowry Co. issued ten-year bonds with a face value of $5,000,000 and a stated interest rate of 8%, payable semiannually on June 30 and December 31. The bonds were sold to yield 10%. Table values are:

Present value of 1 for 10 periods at 8% 0.46319
Present value of 1 for 10 periods at 10% 0.38554
Present value of 1 for 20 periods at 4% 0.45639
Present value of 1 for 20 periods at 5% 0.37689
Present value of annuity for 10 periods at 8% 6.71008
Present value of annuity for 10 periods at 10% 6.14457
Present value of annuity for 20 periods at 4% 13.59033
Present value of annuity for 20 periods at 5% 12.46221

Instructions
(a) Calculate the issue price of the bonds.

Click here for the solution: On January 1, 2011, Lowry Co. issued ten-year bonds with a face value of $5,000,000 and a stated interest rate of 8%, payable semiannually on June 30 and December 31