Recording bond issue-interest payment-early bond retirement

Assignment Help Financial Accounting

Reference no: EM131208021

Recording Bond Issue, Interest Payments (Straight-Line Amortization), and Early Bond Retirement On January 1, 2015, Loop Raceway issued 600 bonds, each with a face value of $1,000, a stated interest rate of 5% paid annually on December 31, and a maturity date of December 31, 2017. On the issue date, the market interest rate was 6 percent, so the total proceeds from the bond issue were $583,950. Loop uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required: 1. Prepare a bond amortization schedule. 2. Give the journal entry to record the bond issue. 3. Give the journal entries to record the interest payments on December 31, 2015 and 2016. 4. Give the journal entry to record the interest and face value payment on December 31, 2017. 5. Assume the bonds are retired on January 1, 2017, at a price of 98. Give the journal entries to record the bond retirement.

Reference no: EM131208021

Questions Cloud

Present value and future value : Jeffrey Inc. estimates that it will need $150,000 in 10 years to expand its manufacturing facilities. A bank has agreed to pay Jeffrey 4% interest compounded annually if the company deposits the entire amount now needed to accumulate $150,000 in 10 y..

The amount recorded for the new machine : Layne Co. has a machine that cost $515,000 on March 20, 2011. This old machine had an estimated life of ten years and a salvage value of $34,000. On December 23, 2015, the old machine is exchanged for a new machine with a fair value of $324,000. Show..

Deferred tax effect due to the depreciation of equipment : During 2014, P & P Products purchased $20,000 of computer equipment with an estimated life of 5 years and no salvage value. P & P Products uses the straight-line method to depreciate its computer equipment for book purposes and uses MACRS depreciatio..

Advanced business financial analysis : Pretend you are the CFO of a company that has paid a steady dividend for the past forty years and your recently hired, brilliant, freshly minted UTA Finance graduate who managed to pass Advanced Business Financial Analysis sends you a text message on..

Recording bond issue-interest payment-early bond retirement : Recording Bond Issue, Interest Payments (Straight-Line Amortization), and Early Bond Retirement On January 1, 2015, Loop Raceway issued 600 bonds, each with a face value of $1,000, a stated interest rate of 5% paid annually on December 31, and a matu..

What income and losses do redfern-blackfoot-rod : Redfern Corporation, a calendar year taxpayer, has been an S corporation for several years. Rod and Kurt each own 50% of Redfern’s stock. On July 1 of the current year (assume a non-leap year), Redfern issues additional common stock to Blackfoot Corp..

Variable overhead efficiency variance for the period : Derf Corporation uses a standard cost system in which it applies manufacturing overhead on the basis of standard direct labor-hours. Two direct labor-hours are required for each unit produced. The variable overhead efficiency variance for the period ..

How much of the dividends go to the common? stockholders : Mathelsea Corporation has 12,000 shares of 77?%,$15 par cumulative preferred stock and 48,000 shares of common stock outstanding. Mathelsea declared no dividends in 2015 and had no dividends in arrears prior to 2015. In 2016?,Mathelsea declares a tot..

The actual number of hours worked during the past period : The standards for direct labor for a product are 5 hours at $10 per hour. Last month, 9,100 units of the product were made and the labor efficiency variance was $8,100 F. The actual number of hours worked during the past period was:

User Account

All Pages