Yates company issued 420,000 8% 10 year bonds on january 1, 2017 interest is payable semi annually on July 1 and January 1. Yates uses the effective interest method of amortization and has a calendar year end. The market rate of interest at the time the bonds were issued was 9%
Use Excel to prepare an amortization schedule that shows the sale of bonds and the calculation of interest expense for the life of the bonds. Use the PV function to calculate for how much the bonds were issued.
Underneath the schedule, prepare the journal entries that would have been made when the bonds were sold and that would have been made at the first two interest payment periods. Also, prepare the journal entry that would have been made when the bonds were retired