A Company Issued 10%, 5-Year Bonds with a Par Value

question 105

Essay

A company issued 10%, 5-year bonds with a par value of $2,000,000, on January 1. Interest is to be paid semiannually each June 30 and December 31. The bonds were sold at $2,162,290 based on an annual market rate of 8%. The company uses the effective interest method of amortization.
(1) Prepare an amortization table for the first two semiannual payment periods using the format shown below. (2) Prepare the journal entry to record the first semiannual interest payment.

Identify the characteristics of employer-sponsored retirement plans.

Understand the concept of vesting in employer pension plans.

Differentiate between defined benefit plans and defined contribution plans.

Recognize the importance of Social Security as a social safety net.

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Definitions:

Thickness

The measure of the dimension from one surface of an object to the opposite surface.

Deformed

Having an irregular or distorted shape or structure, often due to genetic factors, environmental conditions, or injury.

Broader

A term indicating a wider scope or more inclusive range of considerations or elements.

Smaller

Having lesser size, quantity, or magnitude compared to something else.