Freiberg Associates issued 700 000 par value four year

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Freiberg Associates issued $ 700,000 par value, four- year, zero- coupon bonds on January 1,
2016. The market rate of interest on the date of the bond issue was 4%. Bond issue costs are $
3,600. The company’s fiscal year ends on December 31. Requireda. Determine the issue price
of the debt. b. Prepare the amortization table for the bond issue, assuming that Freiberg uses
the effective interest rate method of amortization. c. Prepare the journal entries to record the
bond issue and the entries on December 31, 2016. Assume the company uses a discount or
premium account, if needed. d. Describe the income statement, balance sheet, and cash flow
statement effects of the bond issue, amortization of the bond issue costs, and the amortization
of discount. e. The bonds are retired early on November 30, 2017, for $ 655,000. Prepare the
journal entry.View Solution:
Freiberg Associates issued 700 000 par value four year zero

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