Prepare the journal entry for issuance of the bonds on june

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Reference no: EM132846279

Question - Eiffel Corp. decided to raise cash to fund its expansion by issuing long-term bonds. The corporation hired an investment banker to manage the issue (best efforts underwriting) and also hired the services of a lawyer, an audit firm, etc. On June 1, 2016, Eiffel sold $500,000 in long-term bonds. Other bonds that Eiffel has issued with identical terms are traded based on a market rate of 10%. The bonds pay interest semi-annually on May 31 and November 30. The bonds are to be accounted for using the effective interest method. Twilight has a December 31st year-end. On June 1, 2018, Eiffel decided to retire 20% of the bonds. At that time the bonds were selling at 98.

Required -

a. Prepare the journal entry for the issuance of the bonds on June 1, 2016.

b. Prepare an amortization table for the period from the bond issue to May 31, 2018.

c. Prepare all entries from after the issue of the bond up to and including December 31, 2016.

d. Prepare the journal entries to record the partial retirement on June 1, 2018.

Reference no: EM132846279

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