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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 provide through step by step calculations.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91165271

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