Computer Inc. is one of the pioneers in the manufacture of microprocessor for computers. On April 1, 2018, Intel issued $1,600,000 of 12% face value bonds for $1,703,411.40. 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 included in the module section to prepare a bond interest expense and premium amortization schedule using the straight-line method.
- Use the same 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, 2018, using the:
- straight-line method of amortization
- effective interest method of amortization
Assume the company retires the bonds on June 30, 2019, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the straight-line method of amortization and the effective interest method of amortization.
