grove Corporation issued $800,000 of 8% bonds on January 1, 2010, due on January 1, 2015. The interest is to be paid twice a year on July 1 and January 1. The bonds were sold to yield 10% effective annual interest. Grove Corporation closes its books annually on December 31.
Instructions
(a) Complete the following amortization schedule for the dates indicated. Use the effective-interest method.
Carrying Amount
Cash Interest Expense Bond Discount of Bonds
1/1/ 2010 $738,224
1/7/ 2010
1/1/ 2011
(1) Prepare the entry on date of issue 1/1/2010.
