On January 1, 2019, Kelly Corporation acquired bonds with a face value of $500,000 for $483,841.79, a price that yields a 10% effective annual interest rate. The bonds carry a 9% stated rate of interest, pay interest semiannually on June 30 and December 31, are due December 31, 2022, and are being held to maturity. Required: Prepare journal entries to record the purchase of the bonds and the first two interest receipts using the: 1. straight-line method of amortization 2. effective interest method of amortization

striaght-line method:

interest expense   24.519,778 debit

           cash                    22,500.00 credit

           discount on BP      2,019.78 credit

--first payment --

interest expense   24.519,778 debit

           cash                    22,500.00 credit

           discount on BP      2,019.78 credit

--second payment--

Effective-rate

interest expense   24.192.09 debit

           cash                    22,500.00 credit

           discount on BP      1,692.09 credit

--first payment --

interest expense   24.276.69 debit

           cash                    22,500.00 credit

           discount on BP       1,776.69 credit

--second payment--

Explanation:

First, We sovle for the amount of the discount

face value      500,000

proceeds       483,841.79

discount             16,158.21‬

under straight line we divide this for the total payments of the loan:

16,158.21 / 8 payments = 2.019,77625‬

This will be added to the cash outlay to get interst expense:

500,000 x 9% / 2 = 22,500

Now, under effective rate:

carrying value x market rate = interest expense

and the difference with the cash outlay is amortization

483,841.79 x 0.05 = 24,192.09

cash outlay               (22,500)

amortization              1,692.09

Then second payment:

(483,841.79+1,692.09) = fair value = 485.533,88

485.533,88 x 0.05 = 24.276.69

cash outlay               (22,500)

amortization                1,776.69

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

answerplace value;