How do I figure straight line amortization without a coupon? - bond straight line amortazation table
Depreciation without coupons!?
On 1 August 2005, a company issues bonds with a face value of $ 600,000. The bonds mature in ten years and you pay 6% interest, payable on each of the 1st February and 1 August. Bonds sold for $ 592,000. The company is using the amortization of bond discount amortization online. End of the year for the company is 31 December. Prepare general journal entry to record accrued interest ATR December 31, 2005th
Tuesday, January 26, 2010
Bond Straight Line Amortazation Table How Do I Figure Straight Line Amortization Without A Coupon?
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1 comments:
I do not understand what you are looking for. The question was asked about the interest earned should be on 31 December. You know the face value of bonds, the interest rate and the number of months, since the bond was issued at the end of the year. Just calculate the interest up to 31 December delineated.
$ 600,000 x 6% annual interest = $ 36,000
$ 36,000 / 12 months = $ 3,000 interest per month
Interest of $ 3,000 per month x 4 months (August-December) = $ 12,000
Journal Entry:
Dr Interest expense $ 12,000
Bond interest expense $ 12,000 Cr
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