Jason Equipment Ltd. issued 10%, five-year bonds with a face value of $2,800,000 on October 1, 2011.

Question:

Jason Equipment Ltd. issued 10%, five-year bonds with a of $2,800,000 on October 1, 2011. The bonds were issued at par and pay interest on April 1 and October 1 each year. The company's fiscal year end is December 31.
Required:
a. Prepare the journal entry for the issuance of the bonds.
b. Prepare the journal entry for the bonds for December 31, 2011, and explain why it is necessary to prepare a journal entry on December 31 although it does not coincide with an interest payment date.
c. Prepare the journal entries for the interest payments on April 1 and October 1, 2012.
d. On October 1, 2012, after paying the semi-annual interest, the company purchased the bonds on the open market and cancelled them. The bonds were purchased at 98 (i.e., at 98% of their Prepare the journal entry to record the purchase and cancellation of the bonds. Face Value
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...