National Orthopedics Co. issued 9% bonds, dated January 1, with a face amount of $650,000 on January 1, 2013. The bonds mature on December 31, 2016 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
| Required: |
| 1. |
Determine the price of the bonds at January 1, 2013.
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| 2. |
Prepare the journal entry to record their issuance by National on January 1, 2013. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)
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| 3. |
Prepare an amortization schedule that determines interest at the effective rate each period.
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| 4. |
Prepare the journal entry to record interest on June 30, 2013. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)
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| 5. |
Prepare the appropriate journal entries at maturity on December 31, 2016. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
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