Calculate the issue proceeds and the accrued interest

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Reference no: EM132217524

Question: On 1 June 20X5, Lush Corp. issued $40,000,000 of 7.5% bonds, with interest paid semi-annually on 30 April and 31 October. The bonds were originally dated 1 November 20X4, and were 15-year bonds. The bonds were issued to yield 8%; accrued interest was received on issuance. The company uses the effective-interest method to amortize the discount. On 31 December 20X5, 10% of the bond issue was retired for 99 plus accrued interest.

I am not understanding how to do these, and on our exam we are just allowed to use the PV tables- no financial calculators. thanks!!

Required:

1. Calculate the issue proceeds and the accrued interest. (Note: Begin by calculating the present value of the bond at 1 May and 1 November 20X5.)

2. Provide the journal entry for 1 June 20X5.

3. Provide the journal entry at 31 October 20X5.

4. Provide the journal entry(ies) at 31 December 20X5

Reference no: EM132217524

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