(Bond Issued at Discount or Premium) Bako Company issued $100,000 of 7% term bonds on January
1, 2019, due on January 1, 2024, with interest payable annually. Assuming that these bonds are issued to
yield 8% and (or) 6% compounded annually.
Required
(1) Calculate the amount of interest that is actually paid annually.
(2) Calculate the bond proceeds.
(3) Prepare journal entry to records the issuance of bonds on January 1.
(4) Prepar a schedule of amortization of the discount and premium and total interest expense each
year through year 5 using both effective-interest method and straight-line method.
(5) Record entries for interest payments and amortization of the discount and premium at the end of
each year using effective-interest method and straight-line method.
(6) Show the statement of financial position presentation of bonds payable as of December 31, 2019
and 2020.
(7) Prepare entry for extinguish at maturity
