On January 1,2018,a Company Issues 3-Year Bonds with a Face

question 177

Essay

On January 1,2018,a company issues 3-year bonds with a face value of $560,000 and a stated interest rate of 8%.Because the market interest rate is lower than the stated interest rate,the company receives $585,200 for the bond.The company uses straight-line bond amortization.
Required:
Part a.Determine the amount of the premium that will be amortized during the year ending December 31,2018.
Part b.Prepare the journal entry to record the first interest payment on December 31,2018.

Analyze the concept and calculations of net present value and its significance in investment decisions.

Grasp the problem of multiple rates of return and its impact on project evaluation.

Identify and differentiate between mutually exclusive and independent projects.

Understand the limitations and applications of the payback period method in capital budgeting.

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