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Effective Interest versus Straight-Lin e Bond Amortization On January 1 2013 Phantom Company acquires $200000 of Spiderman Products Inc 9% bonds at a price of

(E fective-Interes versu Straight-Lin Bon Amortization On January 1, 2013, Phantom Company acquires $200,000 of Spiderman Products, Inc., 9% bonds at a price of $185,589. The interest is payable each December 31, and the bonds mature December 31, 2015. The investment will provide Phantom Company a 12% yield. The bonds are classified as held-to-maturity.

 

Instructions

(a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight- line method.

(b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method.

(c) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortiza- tion under the straight-line method.

(d) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortiza- tion under the effective-interest method.

Jun 18 2020 View more View Less

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