Question - On January 1, 2013, Company XYZ issued:
$100,000, 9%, four-year bonds.
Interest is paid semiannually on June 30 and December 31.
The bonds were issued at $96,768 to yield an annual return of 10%.
1) Show an amortization schedule that determines interest at the effective interest rate
2) Show an amortization schedule by the straight-line method
3) Show the journal entries to record interest expense on June 30, 2014, by each of the two approaches
4) Assuming the market rate is still 10%, what price would a second investor pay the first investor on June 30, 2014, for $10,000 of the bonds?