Kershaw Electric Ltd. sold $6 million of 10%, 10-year bonds on January 1, 2024. The bonds were
Question:
Kershaw Electric Ltd. sold $6 million of 10%, 10-year bonds on January 1, 2024. The bonds were dated January 1, 2024, and pay interest on January 1. The bonds were sold at 98.
Instructions
a. Prepare the journal entry to record the issuance of the bonds on January 1, 2024.
b. Assume that at December 31, 2024, $8,000 of the discount has been amortized. Show the balance sheet presentation of the non-current liability at December 31, 2024.
c. Assume that on January 1, 2026, when the bonds’ carrying amount was $5,896,000, the company redeemed the bonds at 102. Record the redemption of the bonds assuming that interest for the period had already been paid.
Step by Step Answer:
Accounting Principles Volume 2
ISBN: 9781119786634
9th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak