Gateway Unlimited sold $2,000,000 of 6-year, 10% bonds on January 1, 2012. The bonds pay interest semiannually on July 1 and January 1. The bonds sell at 97. The straight-line method is used to amortize any bond premium or discount.
a. Prepare all journal entries related to the bonds for 2012 and 2013 and show how the bonds would be reported on the December 31 balance sheets.
b. How would the 2012 statement of cash flows be affected by the bonds?
c. Prepare a bond amortization schedule.
d. On July 1, 2016, after the interest payment, Gateway redeems the bonds for 101. Prepare the entry to record the redemption.
e. How would the 2016 statement of cash flows be affected by the redemption?

  • CreatedJuly 16, 2015
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