In each of the following independent cases, the company closes its books on December 31. 1. Sanford
Question:
1. The due date of the bonds is September 1, 2020. The bonds yield 12%. Give entries through December 31, 2018.
2. Titania Co. sells $400,000 of 12% bonds on June 1, 2017. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2021. The bonds yield 10%. On October 1, 2018, Titania buys back $120,000 worth of bonds for $126,000 (includes accrued interest). Give entries through December 1, 2019.
Instructions
For the two cases, prepare all of the relevant journal entries from the time of sale using time value of money tables, a financial calculator, and computer spreadsheet functions, until the date indicated. Use the effective-interest method for discount and premium amortization. Construct amortization tables where applicable. Amortize premium or discount on interest dates and at year end. Assume that no reversing entries were made?
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Step by Step Answer:
1 Sanford Co Calculate cash proceeds on issuance 1 Using tables Present value of annuity 25000 x 558238 139559 Present value of principal500000 x 066506 332530 Total 472089 2 Using a financial calcula...View the full answer
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Related Book For 
Intermediate Accounting
ISBN: 978-1119048541
11th Canadian edition Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
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