On January 1, 200X Rare Bird Ltd. purchased 12% bonds dated January 1, 200X, with a face

Question:

On January 1, 200X Rare Bird Ltd. purchased 12% bonds dated January 1, 200X, with a face amount of $20 million. The bonds mature in 2022 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31.

Required:1. Determine the price of the bonds at January 1, 200X.

2. Prepare the journal entry to record the bond purchase by Rare Bird on January 1, 200X.

3. Prepare the journal entry to record interest on June 30, 200X, using the effective interest method.

4. Prepare the journal entry to record interest on December 31, 200X, using the effective interest method

2. In November sold $4,000 of gift cards. $700 of these were redeemed. In December sold $3,000 of gift cards, and redeemed $2,000 of November gift cards, and $400 of December gift cards. Prepare all journal entries appropriate to be recorded these transactions

3. Fowler Co.'s balance sheet showed the following at December 31. Common stock $10 par value = $100,000; Paid in capital in excess of par = $50,000; Retained earnings = $20,000. A cash dividend of $1.00 per share is declared on December 31 and is payable the following January 20 to shareholders of record on January 10. Required: Prepare all appropriate journal entries.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...