On November 1, 2022, Charlie, Inc issued bonds to purchase a plot of agricultural land to be used for growing medical catnip which is newly allowed based on a binding referendum based on the election results on November 6, 2021. The bonds have a face value of $600,000 and a face interest rate of 12%. The bonds mature in 10 years. The bonds are Moody's rated CCC.1 The land has been appraised at a value of $650,000. The bonds pay interest on June 30 and December 31 each year. a) Record the journal entry for the exchange of the bonds for the building. b) Record the journal entry as of December 31, 2022. c) On January 1, 2023, the US Department of Justice issued guidance to crack down on medical catnip growing, despite 10 states having laws legalizing the use of recreational catnip by cats age 3 and older. Charlie, Inc is now in extreme financial distress and, as a settlement agreement, agrees to exchange the land for full release of obligation to repay the debt. The bondholders assess the fair value of the land to be $475,000. 

Record this journal entry

Answer rating: 100% (QA)

a Record the journal entry for the exchange of the bonds for ... View the full answer