Problem:
Grove Corporation issued $4,000,000 of 8% bonds on October 1, 2014, due on October 1, 2019. The interest is to be paid twice a year on April 1 and October 1. The bonds were sold to yield 10% effective annual interest. Grove Corporation closes its books annually on December 31. Instructions
Required:
Question 1: Complete the following amortization schedule for the dates indicated. (Round all answers to the nearest dollar.) Use the effective-interest method. Debit Credit Carrying Amount Credit Cash Interest Expense Bond Discount of Bonds October 1, 2014 $3,691,117 April 1, 2015 October 1, 2015
Question 2: Prepare the adjusting entry for December 31, 2015. Use the effective-interest method.
Question 3: Compute the interest expense to be reported in the income statement for the year ended December 31, 2015.
Note: Please show basic calculation