Question: Chura Inc issued 5 000 000 10 year 5 bonds on February 1

Chura Inc. issued $5,000,000, 10-year, 5% bonds on February 1, 2014, when the yield was 6%. Interest is payable semiannually each July 31 and January 31. All of the bonds were sold on February 1, 2014; they mature on January 31, 2024. Chura’s year-end is December 31. The effective interest method is used.
Requirements
1. Compute the issue (sale) price on February 1,2014.
2. Record all journal entries for 2014.
3. Record the journal entry for the interest payment on January 31, 2015.
4. Assume on February 1, 2021, Chura retired 60% of its bonds at 96.75. What is the carrying value of the bonds payable? Calculate the gain or loss on the bond retirement.
5. Record the journal entry for the bond retirement on February 1, 2021.

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  • CreatedJuly 08, 2015
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