Question

Selected transactions on the books of Pfaff Corporation follow:
May 1, 2011 Bonds payable with a par value of $700,000, which are dated January 1, 2011, are sold at 105 plus accrued interest. They are coupon bonds, bear interest at 12% (payable annually at January 1), and mature on January 1, 2021. (Use an interest expense account for accrued interest.)
Dec. 31 Adjusting entries are made to record the accrued interest on the bonds and the amortization of the proper amount of premium. (Use straight-line amortization.)
Jan. 1, 2012 Interest on the bonds is paid.
April 1 Par value bonds of $420,000 are purchased at 103 plus accrued interest and are retired. (Bond premium is to be amortized only at the end of each year.)
Dec. 31 Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium amortized.
Instructions
(a) Assume that Pfaff follows private enterprise GAAP. Prepare the journal entries for the transactions above.
(b) How would your answers to the above change if Pfaff were to follow IFRS?


$1.99
Sales0
Views29
Comments0
  • CreatedAugust 23, 2015
  • Files Included
Post your question
5000