Chiam Corporation has $300,000 of 12% bonds, callable at 102, with a remaining 10-year term, and interest

Question:

Chiam Corporation has $300,000 of 12% bonds, callable at 102, with a remaining 10-year term, and interest payable semiannually. The bonds are currently valued on the books at $290,000, and the company has just made the interest payment and adjustments for amortization of any premium or discount. Similar bonds can be marketed currently at 10% and would sell at par.

1. Give the journal entries to retire the old debt and issue $300,000 of new 10% bonds at par.

2. In what year will the reduction in interest offset the cost of refinancing the bond issue?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...