Bonds issued at a premium
Business Finance
Intel Inc. is the pioneer in the manufacture of microprocessor for computers. On 4/1/2016, Intel issued $800,000 of 12% face value bonds for $851,705.70. The bonds are due in 4 years, and pay interest semiannually on September 30 and March 31. Intel sold the bonds to yield 10%.
- Use the spreadsheet found in the link at the bottom to prepare a bond interest expense and premium amortization schedule using the straight-line method.
- Use the attached spreadsheet to prepare a bond interest expense and premium amortization schedule using the effective interest method.
- Prepare any adjusting entries for the end of the fiscal year, December 31, 2016, using the:
- straight-line method of amortization
- effective interest method of amortization
- Assume the company retires the bonds on June 30, 2017, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the:
- straight-line method of amortization
- effective interest method of amortization