BONDS ISSUED AT FACE VALUE WITH SINKING FUND Creswell Entertainment issued the following bonds: Date of issue
Question:
BONDS ISSUED AT FACE VALUE WITH SINKING FUND Creswell Entertainment issued the following bonds:
Date of issue and sale: ........April 1, 20-1
Principal amount: ..........$600,000
Sale price of bonds: .........100
Denomination of bonds: ......$10,000
Life of bonds: ..........20 years
Stated rate: ............8%, payable semiannually on
.................September 30 and March 31
Annual sinking fund requirement: ....$40,000, payable on June 1
REQUIRED
Prepare journal entries for:
(a) Issuance of the bonds.
(b) Deposit to sinking fund on June 1.
(c) Interest payment on the bonds on September 30, 20-1.
(d) Earnings of $3,000 on the sinking fund in 20-1.
(e) Year-end adjustment on the bonds for 20-1.
(f) Reversing entry for the beginning of 20-2.
(g) Interest payments on the bonds for 20-2 (March 31 and September 30).
(h) Redemption at maturity from the sinking fund.
(i) Return of excess cash of $1,900 from the sinking fund to the corporation.
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Step by Step Answer:
DATE 201 Apr 1 Cash DESCRIPTION Bonds Payable June 1 Bond Sinkin...View the full answer
